Equilibrium Flashcards
chapter5
1
Q
define a market equilibrium
A
if no interference in the market occurs (by the government or other agency), price will eventually settle at the level where quantity demanded equals quantity supplied. This position where there is no tendency for prices to change is called the Market Equilibrium.
2
Q
what does a producer if the quantity supplied exceeds the quantity demanded?
A
he will lower the price to get rid of surplus stocks
3
Q
what does a producer if the quantity demanded exceeds the quantity supplied?
A
he would increase the price, scarcity would exist
4
Q
what is meant by equilibrium price?
A
the price where quantity supplied meets quantity demanded
5
Q
what is mint by equiblibrium quantity?
A
the quantity where quantity demanded meets quantity supplied
