3.5 the determination of equilibrium market price Flashcards
1
Q
what is market equilibrium
A
the point where the demand curve meets the supply curve - dictating the price in the market. the point where the amount the consumers want to buy is equal to the amount the suppliers want to produce at a price level
2
Q
what is market disequilibrium
A
the market is not at a stable price and quantity causing excess supply of demand, the difference between the quantity demanded and the quantity supplied at that price level
3
Q
what will excess supply force producers to do
A
cut prices as they can make more profits
4
Q
what does excess demand indicate to producers
A
they can generate more profits by raising the price
5
Q
so what would excess demand and excess supply do
A
lead to a price change
