🔄 Market Equilibrium: The Circular Flow

See how consumer and producer decisions interact through the market to determine price and quantity

👤 Consumer
Demand Side
Preferences
Income (M) $100
Preference (α) 0.50
Other Prices
Price of Y (Pᵧ) $2.00
# Consumers 100
Optimal X*
25.0
Utility
25.0
Spending on X
$50
Consumer Surplus
$125
⚖️ Market for Good X
Equilibrium
Market Equilibrium
Price
$2.00
Quantity
2,500
Total Welfare = CS + PS
CS
PS
Consumer: $1250 Producer: $1250
Demand
Supply
CS
PS
🏭 Producer
Supply Side
Cost Structure
Fixed Cost $20
MC Base (a) $0.50
Production
MC Curve (c) 0.020
# Firms 50
Firm Output q*
8.7
Firm Revenue
$17.3
Firm Cost
$15.1
Firm Profit
$2.20