5 - Markets Flashcards
How is the price in a market set?
where the wishes of the consumers are matched exactly with those of producers
Equilibrium/market clearing price
where supply and demand meet
Total revenue
price x quanitity
amount of money generated by sales
What will an increase in demand do to price
they will rise, suppliers are able to put their prices up
How will an increase in demand be shown on a demand curve
a shfit to the right
What will a decrease in demand do to price?
prices will fall, to avoid having unsold stock
How will a decrease in demand be shown on the demand curve?
move to the left
What will an increase in supply do to price?
price will fall
how will an increase in supply be shown on a supply curve
move to the right
What would happen if supply fell, to prices?
price would increase
how would a fall in supply be shown on a supply curve
move to the left
Disequilibrium in the market
price isnt set at the point where supply and dmeand are equal
The result of disequilibrium in the market
excess demand
excess supply
