8- Price mechanism definitions

Question 1

Market forces

Answer 1

Forces in free markets which act to reduce prices when there is excess supply and increase them when there is excess demand.

Question 2

Price mechanism

Answer 2

The system of resources allocation based on the free market movement of prices, determined by the supply and demand curves.

Question 3

Equilibrium price/quantity

Answer 3

Where demand equals supply so there are no more market forces to bring about change to price or quantity demanded.
Market clearing price.