Price determination

Question 1

What is market clearing price

Answer 1

all buyers can get the exact amount that they want to buy at this price and all sellers provide exactly the amount that they want to sell at this price

therefore, there is nothing left over – the market has cleared

Question 2

If prices rised what would happen to supply and demand for goods from firms and what would firms do

Answer 2

supply up, demand down,

so excess supply

so firms reduce prices to clear the excess supply

Question 3

What do market forces do

Answer 3

are always pushing prices towards market equilibrium

Question 4

What is disequilibrium

Answer 4

occurs when there is an imbalance in the quantity demanded and quantity supplied of a produc

Question 5

whats market equilibrium

Answer 5

demand = supply

Question 6

what is market clearing price known as

Answer 6

market equilibrum