Chapter 5? Eqm Flashcards
1
Q
Equilibrium
A
A situation in which price has reached the level where quantity supplied equals quantity demanded
2
Q
Equilibrium price
A
Price that balances quantity supplied and quantity demanded (intersection)
3
Q
Equilibrium quantity
A
The quantity supplied and the quantity demanded at the equilibrium price (intersection x axis)
4
Q
What happens when there is a surplus or excess supply?
A
Producers will start offering lower prices, downward pressure on price.
5
Q
Surplus
A
Quantity supplied is greater than quantity demanded
6
Q
Shortage
A
Quantity demanded is greater than quantity supplied
7
Q
Law of supply and demand
A
The claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded to equilibrium (double check this lol
