Market Equlibrium (Topic 4)

Question 1

What is market equilibrium

Answer 1

A market situation that occurs at any price and quantity where quantity demanded and the quantity supplied are equal

Question 2

Price ceiling

Answer 2

A legally established maximum price a seller can charge
-When the current equilibrium price is considered to be too high
-set below equilibrium price
-A shortage is created

Question 3

Price floor

Answer 3

A legally established minimum price a seller can be paid
-when the current equilibrium price is considered to be too low
-Set above equilibrium price
-Surplus is created