ROLE OF FIRMS Flashcards
1
Q
Supply
A
The quantity firms are willing and able to sell at a certain price
2
Q
Law of supply
A
when the price of a good increases, so will the supply and vice versa (as long as other variables, like the cost, availability and quality of factors of production remain the same)
3
Q
Market equilibrium
A
the price mechanism and market efficiency (demand and supply are in balance)
4
Q
Market price
A
created by the interaction of demand and supply, how much something costs
5
Q
Market clearing price
A
= equilibrium price = everything on the market will be sold
