CH12 Price determination Flashcards
1
Q
Where is the equilibrium or market clearing price set?
A
it is set where demand equals supply
2
Q
what will changes in demand and supply lead to?
A
they will lead to new equilibrium prices being set
3
Q
what will a change in demand lead to?
A
it will lead to a shift in the demand curve, a movement along the supply curve and a new equilibrium price
4
Q
what will a change in supply lead to?
A
it will lead to a shift in the supply curve, a movement along the demand curve and a new equilibrium price
5
Q
do markets necessarily tend towards the market price?
A
no
6
Q
what will changes in supply and demand affect?
A
they will affect consumer and producer surplus
7
Q
is the equilibrium price the price which will lead to the greatest economic efficiency or the greatest equity?
A
no not necessarily.
