1.2.3 Market equilibrium

Question 1

What is equilibrium?

Answer 1

Equality between market demand and supply

Question 2

What’s another word for equilibrium?

Answer 2

Market clearing price

Question 3

If price is set above equilibrium point what happens to supply?

Answer 3

It would be greater than demand= Surplus

Question 4

If price is set below equilibrium point what happens to demand?

Answer 4

It would be greater than supply= Shortage

Question 5

NON price factors
What does a rise in demand do to the curve?

Answer 5

It shifts up and right

Question 6

NON price factors
What does a fall in demand do to the curve?

Answer 6

It shifts down and left

Question 7

NON price factors
What does a rise in supply do to the curve?

Answer 7

It shifts down and right

Question 8

NON price factors
What does a fall in supply do to the curve?

Answer 8

It shifts up and left

Question 9

What are 3 examples of changes to supply due to non-price

Answer 9

-Increased competition
-Indirect tax and subsidies
-Cost in production

Question 10

What are 3 examples of changes to demand due to non-price

Answer 10

-Shift in consumer preference
-Consumer income
-Price of complementary goods

Question 11

If a business changes the price of a product what changes on the graph?

Answer 11

Causes movement along the supply curve, changing the point of equilibrium