Price determination/Price changes(Chapter 9/chapter 10))

Question 1

Market equilibrium/Equilibrium price

Answer 1

• It is the price at which the amount supplied is equal or satisfies the amount demanded.
• when demand and supply are combined, we can find the price at which quantity demanded and quantity supplied will be equal.

Question 2

Market disequilibrium

Answer 2

When demand does not equal supply

excess supply = low prices
excess demand = high prices

Question 3

A shift in the market demand curve - change in market prices

Answer 3

An increase in demand = shift outwards
A decrease in demand = shift inward

There are many reasons for the increase/decrease that is gone over in the demand chapter.

Changes in demand conditions will result in changes in market price and the allocation of resources to the production of different goods and services.

Question 4

A shift in the market supply curve - change in market prices

Answer 4

An increase in supply= shift outwards
A decrease in supply = shift inward

There are many reasons for the increase/decrease that is gone over in the supply chapter.

Changes in supply conditions will result in changes in market price and the allocation of resources to the production of different goods and services.