MARKET EQUILIBRIUM Flashcards
in a free market, the forces of supply and demand interact to determine equilibrium quantity and equilibrium price
EQUILIBRIUM
when the market is not in equilibrium, you get either excess supply or excess demand, and a tendency for price to change.
EQUILIBRIUM
in a market economy, a price is derived or determined if the forces of demand and supply operate together.
EQUILIBRIUM
a state of balance when demand Is equal to supply
EQUILIBRIUM
this equality shows that the quantity that sellers are willing to sell is also the quantity that buyers are willing to buy for a price
EQUILIBRIUM
corresponding response in the market:
buyers – increase demand
sellers – decrease supply
IN CASE OF SHORTAGE
the price normally increases
IN CASE OF SHORTAGE
in this case, A _______ is set by the government to PROTECT THE BUYERS.
PRICE CEILING
is the MAXIMUM PRICE that is charged for a product
PRICE CEILING
the Price Act
Republic Act No. 7581
an increase in demand creates excess demand at the original equilibrium price.
the excess demand pushes price upward until new higher price and quantity are reached.
Shortage
decrease in supply creates excess demand at the original equilibrium price.
the excess demand pushes price upward until a new higher price and lower quantity are reached.
Surplus
the price normally decreases
Surplus
corresponding response in the market:
buyers –decrease consumption
sellers – increase their supply/production
Surplus
IS THE MINIMUM or LEAST PRICE OF A PRODUCT that is set by the government to intervene in the market price.
Price floor
