Chapter 4: Competitive markets Flashcards
0
Q
Disequilibrium
A
A situation within the market where supply does not equal demand.
1
Q
Equilibrium
A
The price at which demand is equal to supply and there is no tendency for change.
2
Q
Excess supply
A
When supply at a particular price is greater than demand; this should signal to producers to lower prices.
3
Q
Market-clearing price
A
The price at which all goods that are supplied will be demanded.
4
Q
Maximum price
A
A price ceiling above which the price of a good or service is not allowed to increase.
5
Q
Minimum price
A
A price floor below which the price of a good or service is not allowed to decrease.
