2.5 The Interaction Of Markets Flashcards

1
Q

Define ceteris paribus

A

Providing all other conditions remain the same

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2
Q

What is equilibrium price and quantity and quantity

A

This is when supply meets demand

At market equilibrium, price has no tendency to change, and is known as the market clearing price

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3
Q

How can you show market equilibrium on a diagram

A
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4
Q

Explain the excess demand in this diagram

A
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5
Q

Explain the excess supply in this diagram

A
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6
Q

When is a new market equilibrium established

A

When the demand or supply curves shift

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7
Q

Explain the impacts on a new market equilibrium in this diagram

A
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8
Q

Explain the impacts of this diagram

A
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9
Q

Give an example of the impact of changes in demand or supply in one market on a related market

A
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10
Q

How useful is supply and demand in analysing the market of commodities

A
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11
Q

Why might supply tend to be unstable in the market of commodities

A
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12
Q

How useful is supply and demand in analysing the market of housing

A
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13
Q

How useful is supply and demand in analysing the market of transport

A
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14
Q

What are the assumptions underlying the model of supply and demand

A
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15
Q

When is supply and demand useful in explaining real world problems

A

The model is useful for competitive markets, where there are many buyers and sellers

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16
Q

When is supply and demand not useful in explaining real world problems

A

In real life, consumers and producers do not have perfect information, and they do not always act rationally, like the model suggests