Questions and Answers
Supply and demand coordinate to determine prices by working:
Both excess supply and excess demand are a result of:
The graph shows excess supply. Which needs to happen to the price indicated by p2 on the graph in order to achieve equilibrium?
On a graph, an equilibrium point is where:
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On a graph, a(n) _____ shows the demand portion of equilibrium.
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Equilibrium is defined when:
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The graph shows excess demand. Which explains why the price indicated by p2 on the graph is lower than the equilibrium price?
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Which occurs during market equilibrium? Check all that apply.
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A limited amount of goods available means that excess _____ is occurring.
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What happens when the quantity of a good supplied at a given price is greater than the quantity demanded?
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Study Notes
Market Price Determination
- Prices are determined through the coordination of supply and demand, working together effectively.
Disequilibrium Causes
- Excess supply and excess demand arise from disequilibrium rather than equilibrium conditions.
Price Adjustment
- To reach equilibrium from excess supply, the price must be decreased.
Equilibrium Point
- An equilibrium point on a graph is established at the intersection of the supply and demand curves.
Demand Curve Representation
- The demand curve illustrates the demand component of the equilibrium.
Definition of Equilibrium
- Equilibrium is achieved when supply and demand intersect, indicating a balance in quantities.
Impact of Price on Demand
- When prices fall, the quantity demanded increases, explaining why prices below equilibrium lead to excess demand.
Characteristics of Market Equilibrium
- During market equilibrium, supply and demand meet at a specific price and quantity, reflecting balance in the market.
Excess Demand Indicator
- A limited amount of goods available indicates that excess demand is occurring in the market.
Consequence of Supply and Demand Imbalance
- When the quantity supplied exceeds the quantity demanded at a certain price, it results in excess supply, indicating a surplus in the market.
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Description
Explore the concepts of supply, demand, and market equilibrium with these flashcards. Each card presents a question that helps reinforce your understanding of how prices are determined in the market. Ideal for students studying economics or related subjects.
