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S E10: Equilibrium - Balance in a Busy World

Think Like An Economist

CHAPTER

Market Forces Push the Price Up When There's a Shortage

Market forces will push the price up until it gets to the equilibrium price. At this price, there's no pressure for the price to change. When coffee is really expensive, coffee shop owners like same want to sell loads of coffee. To get more people like me to buy coffee, they're going to have to drop their prices. As the price goes down, more people are willing to buy coff as well. The process of coffee shops cutting their prices to try to lure customers to buy their surplus will continue until we get to our equilibrium price of five dollars.

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