Microeconomics,, 16th Canadian Edition

The supply schedule or curve is given by

This is the supply function with respect to price, all other
variables being held constant. This function, often written
concisely as , shifts in response to changes in other
variables.
5. Equilibrium occurs where. For specified values of all other
variables, this requires that

Equation 5.1 defines an equilibrium value of p; although p is an

independent or exogenous variable in each of the supply and

demand functions, it is an endogenous variable in the economic

model that imposes the equilibrium condition expressed in

Equation 5.1. Price is endogenous because it is assumed to

adjust to bring about equality between quantity demanded and

quantity supplied. Equilibrium quantity, also an endogenous

variable, is determined by substituting the equilibrium price into

either or.

Graphically, Equation 5.1 is satisfied only at the point where the

demand and supply curves intersect. Thus, supply and demand

curves are said to determine the equilibrium values of the

endogenous variables, price and quantity. A shift in any of the

independent variables held constant in the d and s functions will

QS=s(p)∣∣C,X,wi

QS=s(p)

QD=QS

d(p)=s(p)

[5.1]

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d(p) s(p)

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