Price determination Flashcards
1
Q
What is the equilibrium?
A
When the quantity supplied is equal to the quantity demanded of a product.
2
Q
What is the equilibrium determined by?
A
It is determined by the interaction of the supply and demand curve. The equilibrium price and quantity would not change unless there was a change in the conditions of demand or supply.
3
Q
What is excess supply?
A
Implies that the QS is greater than the QD at the existing price.
4
Q
What is excess demand?
A
Implies that the QD is greater than the QS at the existing price.
5
Q
What can cause a change in the Equilibrium price?
A
A change in the condition of demand
A change in the condition of supply
