1.2.3 The interaction of supply and demand Flashcards
1
Q
What is equilibrium?
A
A position where demand equals supply.
There are no shortages and no surpluses.
2
Q
When does a surplus occur?
A
When the price is set above equilibrium and supply is greater than demand.
3
Q
When does a shortage occur?
A
When the price is set below equilibrium and demand is greater than supply.
