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The stock market determines prices by constantly-shifting movements in the supply and demand for stocks. The price and quantity where supply are equal is called Market Equilibrium, and one major role of stock exchanges is to help facilitate this balance.
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2. Interpret supply and demand curves. 3. Understand the difference between a change in supply (demand) and a change in the quantity supplied (demanded). 4. Describe some changes that would cause a shift in a supply curve, or a demand curve. 5. Explain how price adjusts due to changes in supply and demand. 6.
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We begin with a review of how supply and demand curves are used to describe the market mechanism. Without government intervention (e.g., through the imposition of price controls or some other regulatory policy), supply and demand will come into equilibrium to determine both the market price of a good and the total quantity produced.
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