Market Equilibrium

Question 1

only one price and quantity combination is compatible combination is compatible with the intentions of both buyers and sellers

Answer 1

Equilibrium

Question 2

Intersection of supple and demand curves

Quantity buyers will buy = quantity sellers will sell

Answer 2

Market price

Question 3

When price adjusts so that quantity demanded equals quantity supplied

Answer 3

Market Equilibrium

Question 4

Markets reach ____ because buyers have a demand behavior ( raise price, buy less, and vice versa) and sellers have a supply behavior ( raise price, supply more and vice versa)

Answer 4

equilibrium

Question 5

The market mechanism leads the market to ___

At equilibrium, quantity demanded equals quantity supplied at the equilibrium

Answer 5

equilibrium

Question 6

The price at which the quantity demanded equals the quantity supplied

Answer 6

equilibrium price

Question 7

the quantity bought and sold at the equilibrium price

Answer 7

equilibrium quantity

Question 8

A market is in equilibrium when price adjusts demanded equals quantity supplied

Answer 8

Market Equilibrium

Question 9

If price is greater than equilibrium level there will be a surplus which forces price down

Answer 9

Market Equilibrium

Question 10

A market is in equilibrium when price adjusts so that quantity demanded equals quantity supplied

Answer 10

Market Equilibrium

Question 11

If price is less than equilibrium level there will be a shortage which forces price up

Answer 11

Market Equilibrium

Question 12

Price below equilibrium creates shortage

Price above equilibrium creates surplus

Answer 12

Market Equilibrium

Question 13

Surplus- excess supply
shortage- excess demand
equilibrium - where D = S

Answer 13

Market Equilibrium

Question 14

the amount by which quantity supplied exceeds quantity demanded at a given price: excess supply
Price is too high

Answer 14

Market Surplus

Question 15

The amount by which quantity demanded exceeds quantity supplied at a give price; excess demand
Price is too low

Answer 15

Market Shortage

Question 16

When:
Buyers behavior changes
---Demand Shifts right
Old equilibrium is upset
Creates a shortage
----price rises
a new equilibrium is established
price rises from P1 to P2
quantity rises from Q1 to Q2

Answer 16

Demand Increases

Question 17

When:
Buyers behavior changes
----demand shifts left
old equilibrium is upset
Creates a surplus
---price falls
a new equilibrium is established
price falls from p1 to p2
quantity falls from q1 to q2

Answer 17

Demand decreases

Question 18

When: 
Sellers behavior changes
---supply shifts right
old equilibrium is upset
creates a surplus
---price falls
a new equilibrium is established
price falls from p1 to p2
quantity rises from q1 to q2

Answer 18

supply increases

Question 19

When:
sellers behavior changes
---supply shits left
Old equilibrium is upset
Creates a shortage
---price rises
A new equilibrium is established
Price rises from p1 to p2
Quantity falls from q1 to q2

Answer 19

supply decreases

Question 20

When both demand and supply changes the equilibrium price and the equilibrium quantity but we need to know the realative magnitudes of the changes to predict some of the consequences.

Answer 20

A change in both demand and supply

Question 21

Prices change when: 
only a market is in disequilibrium
--shortage? price rises
--surplus? price falls
A shift in either demand or supply causes the price to change, but..

Answer 21

a price change does not cause

• –the demand curve to shift or
• –the supply curve to shift