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Open it To reach equilibrium, price must adjust until there is neither an excess supply nor an excess demand. That adjustment is called the market mechanism , and it is characterized in the following way: In the case of excess supply, price will fall; in the case of excess demand, price will rise; and in the case of neither excess supply no
Original toplevel document
3.7. The Market Mechanism: Iterating toward Equilibrium—or Not t buyers are willing to purchase 5,400 more units than sellers are willing to offer. This result is shown in Exhibit 9.
Exhibit 9. Excess Demand as a Consequence of Price below Equilibrium Price
<span>To reach equilibrium, price must adjust until there is neither an excess supply nor an excess demand. That adjustment is called the market mechanism , and it is characterized in the following way: In the case of excess supply, price will fall; in the case of excess demand, price will rise; and in the case of neither excess supply nor excess demand, price will not change.
EXAMPLE 7
Identifying Excess Demand or Excess Supply at a Non-equilibrium Price
In the local market for e-books, the aggregate demand i
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