4. How A Competitive Market Functions. Flashcards
1
Q
Disequilibrium.
A
A situation within a market where supply does not equal demand.
2
Q
Excess supply.
A
When supply at a particular price is greater than demand. (Signals producers to lower prices.)
3
Q
Market clearing price.
A
The price at which all goods that are supplied will be demanded.
4
Q
Excess demand.
A
When demand is greater than supply at a given price.
5
Q
Maximum price.
A
A price ceiling above which the price of a product is not allowed to increase.
6
Q
Minimum price.
A
A price floor below which the price of the product is not allowed to decrease.
7
Q
Equilibrium price.
A
The price at which demand is equal to supply and there is no tendency for change.
