Balancing Supply and Demand in Market Pricing

The video tutorial explains the concept of supply and demand in the market using Farmer Davies as an example. It describes how Farmer Davies adjusts his apple prices through three phases to reach the equilibrium price. Initially, he sets a high price leading to oversupply, then lowers it too much causing excess demand, and finally finds a balance where supply meets demand. This process illustrates how equilibrium price is achieved, benefiting both the seller and the customers.

What is the primary goal of Farmer Davies in the market?

• To sell apples only to John

• To buy apples at the lowest price

• To avoid selling apples

• To sell as many apples as possible at a good price

What is the equilibrium price?

• The price at which demand exceeds supply

• The price at which supply and demand are equal

• The price at which supply exceeds demand

• The price at which no one buys the product

What is the main challenge in achieving the equilibrium price?

• Ignoring customer preferences

• Adjusting prices through several phases

• Setting prices too low

• Setting prices too high

What happens when Farmer Davies sets the price of apples at 5 Euros per kilo?

• He gains more customers

• He buys more apples

• He loses customers to competitors

• He sells all his apples

What is the effect of an oversupply in the market?

• Prices increase

• Prices decrease

• Supply decreases

• Demand increases

What is the result of setting the apple price at 1 Euro per kilo?

• Demand exceeds supply

• No one buys apples

• Supply exceeds demand

• Supply and demand are equal

What does excess demand lead to in terms of pricing?

• Price increases

• Price decreases

• No change in supply

• Price remains the same

What is the outcome when the apple price is adjusted to 3 Euros?

• No apples are sold

• Supply and demand are balanced

• Demand exceeds supply

• Supply exceeds demand

Who benefits when the equilibrium price is reached?

• Only Farmer Davies

• Only John

• Neither Farmer Davies nor the customers

• Both Farmer Davies and the customers