Demand/Supply in the market Flashcards
What is a market?
A market is a place where buyers and sellers meet for the purpose of engaging in a business transaction. In other words, it can be defined as a place where a group of buyers and sellers interact for the purpose of buying
What determines the price in the market
Buying decisions of households and selling decisions of firms interact to determine the price in the market
What does equilibrium mean?
It means a “state of balance” or “a state of rest” It is where opposing forces are equal so there is no tendency to change
Where does equilibrium occur in the market
Equilibrium occurs at the intersection of the demand and supply curve.
When does equilibrium occur
Equilibrium in the market occurs when demand and supply are equal. The market is cleared which means that all goods produced for sale have been bought up by buyers (look at table)
