Question

What are the three classes of outcomes - other than equilibrium - that a model can produce?

Answer 1

In this example, our demand and supply model will illustrate the market for salmon in the year before the good weather conditions began—you can see it above. The demand curve \text{D0}D0D, 0 and the supply curve \text{S0}S0S, 0 show that the original equilibrium price was $3.25 per pound and the original equilibrium quantity was 250,000 fish. This price per pound is what commercial buyers pay at the fishing docks; what consumers pay at the grocery is higher.