Markets 1.2.3 Flashcards
1
Q
Interaction between supply and demand
A
Prices for goods/serivice are determined by the interaction between supply and demand. Sellers with gradually adjust their prices until their in an equilibrium price and quantity.
2
Q
A rise in demand
A
At the original price, there is now a shortage as demand exceeds the supply so price rises.
3
Q
A fall in demand
A
At the original price, there is now a surplus as supply exceeds demand so price falls.
4
Q
A rise in supply
A
A the original price, there is now a surplus as supply exceeds demand so price falls.
5
Q
A fall in supply
A
At the original price there is now a shortage as demand exceeds the supply so price rises.
