Microeconomics: Theory and Applications with Calculus, 4e

2.7 Quantity Supplied Need Not Equal Quantity Demanded

In a supply-and-demand model, the quantity supplied does not necessarily equal the quantity demanded because of the way we defined these two concepts. We defined the quantity supplied as the amount firms want to sell at a given price, holding constant other factors that affect supply, such as the price of inputs. We defined the quantity demanded as the quantity that consumers want to buy at a given price, if other factors that affect demand are held constant. The quantity that firms want to sell and the quantity that consumers want to buy at a given price need not equal the quantity that is bought and sold.

We could have defined the quantity supplied and the quantity demanded so that they ...