Equilibrium Flashcards
1
Q
When is a market at equilibrium?
A
A market is in equilibrium if at the market price the quantity demanded is equal to the quantity supplied.
2
Q
What is a surplus?
A
A surplus is when the price is above equilibrium, which encourages sellers to lower their prices to eliminate the surplus.
3
Q
What is a shortage?
A
A shortage is when the price is below equilibrium, which leads to the price of the good increasing.
