1.2.6 Flashcards
What does equilibrium mean?
A state of equality or balance between market demand and supply
What is disequilibrium?
Prices where demand and supply are out of balance
What does equilibrium price represent?
Trade-off for buyer and seller
How does an outward shift of market demand impact the equilibrium?
Rise in equilibrium price and expansion of market supply
How does an outward shift in market supply affect the equilibrium?
A fall in equilibrium price and expansion of market demand
If demand increases what is the affect on the equilibrium price and equilibrium quantity?
-Higher
-Higher
If demand decreases what is the affect on the equilibrium price and equilibrium quantity?
-Lower
-Lower
If supply increases what is the affect on the equilibrium price and equilibrium quantity?
-Lower
-Higher
If supply decreases what is the affect on the equilibrium price and equilibrium quantity?
-Higher
-Lower
What is excess demand?
When quantity demanded exceeds avaliable supply
When does excess demand occur?
When the current makret price is set below the equilibrium price
What does excess demand result in?
Queuing and upward pressure on price
What is excess supply?
State of disequilibrium in a market
When does excess supply occur?
Supply is greater than demand and there are unsold goods in the market
Surplusues have what effect on market price?
Downward pressure
