PRICE MECHANISM/EQUILIBRIUM Flashcards
1
Q
Explain what the PRICE MECHANISM/EQUILIBRIUM IS?
A
Is when the price and demand meet
2
Q
What is meant by Non Equilibrium/Disequalibrium?
A
This is when price drops and demand becomes more than supply
3
Q
What is the Invisible Hand and what does it mean?
A
The invisible hand refers to Non Equilibrium. It when there is an invisible hand putting pressure on price or quantity
4
Q
How do you get a market back to Equilibrium if it is in Disequalibriam
A
Pressure on price and quantity need to happen with the price and quantity meeting
5
Q
What is a GLUT
A
A glut is when the quantity doesn’t meet the demand. For example too many shoes that nobody wants to buy. This will put pressure on the price to try to get the price and quantity to meet so the shoes sell again.
