chapter 9 - price determination

Question 1

definition of:

market equilibrium

Answer 1

when quantity demanded for a product equates the quantity supplied for a product

Question 2

definition of:

equilibrium price

Answer 2

the price is established when the demand curve intersects the supply curve

Question 3

definition of:

market disequilibrium

Answer 3

when quantity demanded for a product is unequal to the quantity supplied of a product

Question 4

definition of:

excess demand

Answer 4

the market price is lower than the market equilibrium price, hence creating shortage

Question 5

definition of:

shortage

Answer 5

demand exceeds supply as the price is lower than market equilibrium

Question 6

definition of:

surplus

Answer 6

when market price is above the market equilibrium price, hence creating surplus

Question 7

definition of:

excess supply

Answer 7

when supply exceeds demand as the price is above market equilibrium, hence creating surplus