Chapter 11 - Market Equilibrium Flashcards
1
Q
Define - “Equilibrium Price”
A
The price at which there is no tendency to change because planned purchases (i.e. demand) are equal to planned sales (i.e. supply)
2
Q
Define - “Excess Demand”
A
Where demand is greater than supply
3
Q
Define - “Excess Supply”
A
Where supply is greater than demand
4
Q
Define - “Free Market Forces”
A
Forces in free markets that act to reduce prices when there is excess supply and raise prices when there is excess demand.
5
Q
Define - “Market-Clearing Price”
A
The price at which there is neither excess demand nor excess supply, but where everything offered for sale is purchased.
