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Which of the following is the correct definition of market equilibrium?
Which of the following is the correct definition of market equilibrium?
- The balance that exists when quantity demanded equals quantity supplied (correct)
- The price at which quantity demanded of a good is exactly equal to the quantity supplied
- The agreement between buyers and sellers in the exchange of goods and services
- The agreed quantity for a seller willing to sell and buyer willing to buy
What is the equilibrium market price (Pe) defined as?
What is the equilibrium market price (Pe) defined as?
- The price agreed by the seller to offer its goods or service for sale and for the buyer to pay (correct)
- The agreed quantity for a seller willing to sell and buyer willing to buy
- The balance that exists when quantity demanded equals quantity supplied
- The price at which quantity demanded of a good is exactly equal to the quantity supplied
What is the equilibrium market quantity (Qe) defined as?
What is the equilibrium market quantity (Qe) defined as?
- The price agreed by the seller to offer its goods or service for sale and for the buyer to pay
- The agreed quantity for a seller willing to sell and buyer willing to buy (correct)
- The balance that exists when quantity demanded equals quantity supplied
- The price at which quantity demanded of a good is exactly equal to the quantity supplied
What happens in the market when there is a surplus?
What happens in the market when there is a surplus?
What are the demand and supply equations used in the mathematical approach to market equilibrium?
What are the demand and supply equations used in the mathematical approach to market equilibrium?
True or false: Market equilibrium exists when quantity demanded equals quantity supplied at a particular price and quantity.
True or false: Market equilibrium exists when quantity demanded equals quantity supplied at a particular price and quantity.
True or false: Equilibrium market price (Pe) is the price at which quantity demanded of a good is exactly equal to the quantity supplied of the same good.
True or false: Equilibrium market price (Pe) is the price at which quantity demanded of a good is exactly equal to the quantity supplied of the same good.
True or false: Equilibrium market quantity (Qe) is the agreed quantity for a seller willing to sell and a buyer willing to buy.
True or false: Equilibrium market quantity (Qe) is the agreed quantity for a seller willing to sell and a buyer willing to buy.
True or false: Market disequilibrium occurs when there is a shortage or surplus in the market.
True or false: Market disequilibrium occurs when there is a shortage or surplus in the market.
True or false: Surplus occurs when the quantity supplied is more than the quantity demanded, leading to a decrease in prices.
True or false: Surplus occurs when the quantity supplied is more than the quantity demanded, leading to a decrease in prices.
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Study Notes
Market Equilibrium
- Market equilibrium is defined as the point at which the quantity demanded equals the quantity supplied at a particular price and quantity.
Equilibrium Market Price (Pe)
- Pe is defined as the price at which the quantity demanded of a good is exactly equal to the quantity supplied of the same good.
Equilibrium Market Quantity (Qe)
- Qe is defined as the quantity at which the quantity demanded equals the quantity supplied.
Market Surplus
- A surplus occurs when the quantity supplied is more than the quantity demanded, leading to a decrease in prices.
Mathematical Approach to Market Equilibrium
- The demand and supply equations are used to represent the mathematical approach to market equilibrium.
Market Disequilibrium
- Market disequilibrium occurs when there is a shortage or surplus in the market.
Additional Key Points
- When there is a surplus, the quantity supplied is more than the quantity demanded, leading to a decrease in prices.
- Market equilibrium exists when the quantity demanded equals the quantity supplied at a particular price and quantity.
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