Chapter 2.4

Question 1

Excess supply/Surplus

Answer 1

When quantity supplied is greater than quantity demanded

Question 2

Excess demand/Shortage

Answer 2

When quantity demanded is larger than quantity supplied

Question 3

What in the free market ensures that the quantity demanded will be equal to quantity supplied?

Answer 3

The existence of excess demand or excess supply

Question 4

Equilibrium

Answer 4

A state of balance between different forces, such that there is no tendency to change

Question 5

Market equilibrium

Answer 5

When quantity demanded is equal to quantity supplied

Question 6

Equilibrium price

Answer 6

The price in market equilibrium

Question 7

Equilibrium quantity

Answer 7

The quantity in price equilibrium

Question 8

Competitive market equilibrium

Answer 8

When quantity demanded equals quantity supplied, and there is no tendency for the price to change

Question 9

What happens in market disequilibrium?

Answer 9

There is excess demand or excess supply, and the forces of demand and supply cause the price to change until the market reaches equilibrium