CHAPTER 12 PRICE DETERMINATION Flashcards
1
Q
Equilibrium price
A
The price in which there is no tendency to change because planned( or desired or ex ante) purchases (i.e. demand) are equal to planned sales (i.e. supply)
2
Q
Excess demand
A
Where demand is greater than supply
3
Q
Excess supply
A
Where supply is greater than demand
4
Q
Free market forces
A
Force in free markets which act to reduce prices when there is excess supply and raise prices when there are excess demand.
5
Q
Market-clearing price
A
The price at which there are neither excess demand nor excess supply but where everything offered for sale is purchased.
