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Does the equilibrium model work in the real world?

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Note: This is the seventh post in a weekly video series on basic microeconomics.

In previous videos in this series from Marginal Revolution University we learned how prices reach equilibrium and how the market works like an invisible hand coordinating economic activity. In the next couple of videos you’ll see why the equilibrium price (he market price where the quantity of goods supplied is equal to the quantity of goods demanded) is the only stable price and whether this model works in the real world.

(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)

Previous in series: How to read a supply curve

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Joe Carter Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).

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