Theme 1.2.3: Markets Flashcards
The point at which quantity demanded and quantity supplied meets is known as what?
The Equilibrium Point
What is Equilibrium Price?
The price at which the amount supplied is equal to the amount demanded
What happens in regards to supply and demand at the Equilibrium Point?
Both are satisfied, there are no unsold products and customers can buy all they demand at the Equilibrium Price ie no surplus or shortages of supply or demand
What is said to have happened at the Equilibrium Point?
The market has cleared
What causes a change in the Equilibrium Point?
. Increase or decrease in demand caused by numerous other factors
. Increase or decrease in supply caused by numerous other factors
Demand increases, how does this impact the supply and demand diagram?
The demand line shifts right or ‘up’
Demand decreases, how does this impact the supply and demand diagram?
Demand line shifts to the left or ‘down’
Demand has increased, what has happened to the supply line?
Trick Question - it stays in the same place
Supply increases, how does this impact the supply and demand diagram?
The supply line goes to the right
Supply decreases, how does this impact the supply and demand diagram?
The supply line goes to the left
Supply has decreased, how does this effect the demand line on the supply and demand diagram?
Trick Question - It doesn’t, it stays in the same place because demand has not been said to be changed
How is the supply line positioned on the supply and demand diagram?
Supply line so it goes ‘UP’ from left to right
How is the demand line positioned on the supply and demand diagram?
Demand line so goes ‘Down’ from left to right
