Price Mechanism

Question 1

What does a price show?

Answer 1

A price shows how much money one needs to pay in exchange for a good or service. It also shows how much one good is valued.

Question 2

What is a price mechanism?

Answer 2

The process of demand and supply be in the market forces to determine or change a price

Question 3

What is the equilibrium price?

Answer 3

The price where the commodity supplied satisfies the amount demanded, and hence the market Clear.

Question 4

What is the equilibrium quantity?

Answer 4

The equilibrium quantity is the quantity of a good or service, but at the equilibrium price the equilibrium quantity is the quantity produced, and bought where the supply and demand curves intersect.

Question 5

What are the four laws of the market?

Answer 5

1. In the short run, centeris parabis, an increase in demand raises the market price and extends quantity supplied.
2. In the short run, ceterus parabus,a decrease in demand Lou is the market price and contracts the quantity supplied.
3. In the short run, ceteris paribus, an increase in supply, lowers the market price and extends the quantity demanded.
4. In the short run, ceteris paribus, a decrease in supply raises the market, price and contracts the quantity demanded.

Question 6

What does it mean when the market is in equilibrium?

Answer 6

It means that the quantity demanded is equal to the quantity supplied. Therefore it is clear, and there are no shortages or surpluses