I am getting this concept miscontrued. If price are displayed below equillibrum, what happens to supply? is it excess of demand?
If you have a normal (upward sloping) supply curve and a normal (downward sloping) demand curve, a price below equilibrium will lead to excess demand, which will cause suppliers to raise the price until it equals the equilibrium price. In this situation, you have a stable equilibrium.
With a downward sloping supply curve, you _ may have _ an unstable equilibrium: a price below the equilibrium price will lead to excess supply, and a price _ decrease _.
If prices are below equilibrium there is excess demand compared to supply. Suppliers increase the price to eqilibrium.
So at what point do we have an unstable euillibrum?
This is true only if you have a stable equilibrium.
It isn’t true for an unstable equilibrium.
Downward sloping supply curve, less steep than the demand curve.