How to Calculate Market Equilibrium | (NO GRAPHING) | Think Econ

In this video we explain how to use the demand and supply equations to solve for the equilibrium price and quantity values (often referred to as P* and Q*) using just algebra! This is something which you will need to know how to do throughout your studies in economics, so it's definitely worth reviewing to ensure you understand it.
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[@ThinkEcon]

Don't forget to like the video and subscribe to the channel to see more economics content like this in the future! :)

[@taiwohassan6506]

how can we solve this particular problem in excel

[@ThinkEcon]

@@taiwohassan6506 It depends. Are you trying to graph it in excel or simply solve using algebra in excel?

[@taiwohassan6506]

@@ThinkEcon I am trying to solve it using algebra

[@taiwohassan6506]

@@ThinkEcon and it's important, I do it , I have solved with hand but I need to solve with the equations in excel

[@ThinkEcon]

@@taiwohassan6506 Depending on the version of excel you have, there is a "solver" tool which allows you to input the two (Demand and Supply) equations and it will solve equilibrium P and Q for you.

[@killerfrank8974]

Broken down so perfectly that even someone like me who's mathematically illiterate can understand it. Thank you; you've earned a new subscriber!

[@ThinkEcon]

I appreciate the kind words, and the subscription! It's really encouraging for me to hear that I'm making a positive impact on students learning about economics! :)

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[@killerfrank8974]

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[@ThinkEcon]

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[@bullshitbilly7738]

was battling to understand this by myself from my course notes, in a couple minutes you taught it to me perfectly. Thank you so much dear brother

[@ThinkEcon]

I'm glad I made everything crystal clear for you! I appreciate the feedback :)

[@mikmak3450]

Fr me too ✨🙌🏼

[@xasashee5115]

Have my Mid-term next week, your video helped me to finally understand how to calculate it, Thank you!

[@ThinkEcon]

I am really happy to hear that! These types of comments are so encouraging for us. Good luck on your midterm next week! :)

[@carsonleclerc7857]

I spent two hours trying figure it out just to come here and for you to explain it in two mins. Thank you

[@ThinkEcon]

You're welcome! Glad I could help you out

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[@ThinkEcon]

I'm really glad I was able to help! 🙂

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Thank you so much for this ! I’m currently taking Econ and I feel like I’m drowning.

[@ThinkEcon]

It can feel overwhelming at times, no doubt. You’ve got this!

[@cynthia3569]

I was struggling in solving this but fortunately for me your video has helped me to understand it very well, Thank you Soo much

[@ThinkEcon]

You're very welcome. I'm glad you found this video helpful! :)

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Great video, Easy to follow along and understand

[@ThinkEcon]

Thank you! We appreciate the feedback and are glad you found it helpful! :)

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[@ThinkEcon]

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[@ThinkEcon]

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I watched a few videos and was so confused... this one was incredibly easy to follow. Thank You!

[@ThinkEcon]

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[@ThinkEcon]

It's what we're here for!

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Very good class. I subscribed. Please tell me what are the tools you are using here to present this topic. Expecting your reply.

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[@ThinkEcon]

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[@ThinkEcon]

Glad you found the video helpful! :)

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[@ThinkEcon]

I'm glad the video helped! Good luck on your exam :)

[@kavitanegi8855]

Thank you so much, it really helped me.🙏

[@ThinkEcon]

I’m glad to hear it!

[@shivangagal]

What would be the producer surplus for these functions? Would it be the area of the trapezoid as we would ignore the area below the x-axis (as y-intercept of supply function is -10)?

[@shadirateb]

Thank you so much, you explain it in a good way 😊

[@ThinkEcon]

Glad I could help! 😊

[@JohnKirwai-jk2qk]

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[@ThinkEcon]

I’m glad it was helpful! :)

[@benhailchiumia5069]

that's very helpful thanks, so how can we solve for complementary goods e.g Qd=410-5Ps-2Pj , Qs=-60+3Ps where Ps:price for slacks and Pj:price for jacket

[@mahwishrizvi7073]

Helpful video sir, but I have a question (how to calculate elasticity of demand in this condition )

[@abmealeakaddis1494]

Thank you for your help and advice for equilibrium calculate basedon all these video is the best

[@ThinkEcon]

You're welcome! We are happy that you found the video useful :)

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[@ThinkEcon]

I appreciate the positive feedback!

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[@ThinkEcon]

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[@ThinkEcon]

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[@ThinkEcon]

I appreciate the kind words! :)

[@fclife]

Thank you for the good work

[@ThinkEcon]

You're very welcome! Glad you enjoyed it :)

[@marthaangwin2040]

Do I keep the negative & positive always on the side it presents itself in the original formula. for example 100-3p = 2p+20. So when we separate the constants and the P's the negative stays with the left and the positive with the right? Hope that makes sense.

[@ThinkEcon]

When you switch anything to the opposite side of the equals sign, you have to change the sign. So for 100 - 3P, the negative sign is attached to the 3P, and so when you move that to the other side, it becomes + 3P. Which would yield 100 = 2P + 20 + 3P. But you'll want to only have P terms on the right, so you would move that + 20 to the left, where it will become - 20. So now you have 100 - 20 = 2P + 3P. Does this help?

[@primus4895]

u made the equation so easy ty ECON

[@ThinkEcon]

I'm glad you found it helpful!

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[@ThinkEcon]

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[@ThinkEcon]

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[@ThinkEcon]

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[@ThinkEcon]

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thanks you not only teach how to do it but you also taught how it actually works

[@ThinkEcon]

I find that teaching how it actually works goes a long way when it comes to truly understanding the concept. I’m glad you found it helpful! ☺️

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[@ThinkEcon]

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[@ThinkEcon]

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[@ThinkEcon]

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[@ThinkEcon]

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[@ThinkEcon]

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[@ThinkEcon]

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EXCELLENT EXPLANATION

[@ThinkEcon]

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[@ThinkEcon]

I’m glad to hear that! :)

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[@ThinkEcon]

You’re very welcome!

[@ayabermudez2115]

Hi. Can you please talk about Taylor Rule.

[@aunisamenace]

where do you get the beginning equation from? the questions i'm working on have no equations only a data chart :/

[@Simon_Ijeoma1]

Find the equilibrium price and quantity for two complementary goods, shirts (S) and jackets (J). Using elimination method. (i) Qds = 410 - 5PS - 2Pj qsS = 60 + 3P Can you please solve this

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[@ThinkEcon]

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Sirr thankss you help me a lot when my teacher discuss this i can't understand because of my seatmate is so loud and annoying thanks A lot btw is this subject is economics?

[@ThinkEcon]

Your seat mate is a negative externality to the class

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[@ThinkEcon]

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[@ThinkEcon]

No problem! Glad I could help :)

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[@ThinkEcon]

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[@ThinkEcon]

You're very welcome!

[@formanauto6034]

Good morning sir. What is 100 , -3p , 2p, in equation please explain it. Thanks

[@ThinkEcon]

So as you'll see in the video, the supply and demand curves are actually linear. So the 100 and the -3P are actually the y-intercept and the slope, the same as if it was in y=mx+b form. Does this help?

[@gracykwarteng1752]

It was well understood

[@ThinkEcon]

I'm glad to hear that! :)

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[@user-sr3fq3vs9d]

Sir I want to learn The chapter Function from 3rd year Economy Book

[@mavjudaotamurodova]

thank you very much. But what if it is a two-good economy? Will I have two equilibriums?

[@ThinkEcon]

You’re welcome, and great question! So if you were given the supply and demand equations of individual goods, then yes, you’d be able to graph supply and demand equilibrium twice, once for each good. This would give you an equilibrium for each good. However, sometimes you’ll be asked to plot what’s called the market demand and market supply, which is all of the demand curves added up, and all of the supply curves added up for all individuals in an economy! Hope this helps :)

[@mavjudaotamurodova]

@@ThinkEcon Yes, helpful. So grateful for your help))

[@hibray_3505]

Qs = -20 + 6P = (?) 😢😢 Please

[@dirgharai299]

Thanks man

[@ThinkEcon]

You're welcome! Glad it was helpful

[@hadeejahussain2946]

Thanks

[@ThinkEcon]

You're welcome!

[@sirjobertsvlog1221]

Where did the values 100 and 3 in Demand function came from?

[@ThinkEcon]

The demand function will normally be given to you in the question. This particular one is just a random demand equation that I’ve made up for the video to illustrate how to calculate equilibrium. If you put the demean equation into y=mx+b form, then the 100 and 3 would represent the slope and y-intercept of the demand curve. Hope this helps!

[@blessymary1173]

Thanku❤

[@ThinkEcon]

You’re welcome!

[@sangaydema3550]

Hello author! From where you get those numbers Qd=100-3p Qs=2p+20 or is it type of question?

[@sangaydema3550]

Can you give me simple formula of equilibrium for grade 9 economics

[@ThinkEcon]

I just made up these particular equations for the example. In an assignment or on a test you would be given your own equations, and the steps to solve would be the same as what I've shown in this video. Hope this helps! :)

[@sangaydema3550]

@@ThinkEcon thank you 🙏

[@ThinkEcon]

You’re welcome ☺️

[@carlmega3879]

AM NOT GOOD AT MATHS BUT THIS WAS VERY HELPFUL SIR

[@ThinkEcon]

I’m really glad to hear that! :)

[@kara-vh7bk]

Ok good now i understand

[@ThinkEcon]

Glad the video helped! :)

[@calmingarts2932]

Why must the supply and demand balance out in a market equilibrium? What is meant by the equilibrium price? Why do you need to use the equilibrium price to work out the values for both p & q? Thank you.

[@ThinkEcon]

The intuition is that in equilibrium, supply and demand equal each other and so at the equilibrium price there is no surplus or shortage of quantity in the economy! It's the price that makes the consumer AND producer both happy to engage in market activities. If the price is higher than equilibrium, the consumer is worse off and will demand less. Therefore there will be a surplus. If the price is lower than the equilibrium price then the producers will be worse off and supply less. In this case there would be a shortage! We call both of these cases "disequilibrium." Hope this helps :)

[@calmingarts2932]

@@ThinkEcon Thank you very much :)

[@rileyebert9335]

What's the background music?