MICRO - LS10 - Price Determination Flashcards
1
Q
What’s market equilibrium
A
When supply of goods at given price matches demand at set price
2
Q
Why is equilibrium also known as market clearing price
A
Price at which the no. of goods for sale is exactly equal to the quantity buyers wish to purchase
3
Q
Excess demand
A
Quantity demanded exceeds quantity supplied at a given price
- consequence of price falling as more can afford and buy it
4
Q
Excess supply
A
Quantity of good/service offered exceeds quantity demanded by consumer at given price
5
Q
Barter system
A
Swapping goods with other countries
6
Q
Why is a barter system inefficient
A
Requires a lot of time and effort
