chapter 6- the role of market Flashcards
1
Q
definition of market system
A
the market system refers to the method of allocating scarce resources through the market forces of demand and supply.
2
Q
definition of market equilibrium
A
market equilibrium exists when the demand for a product matches the supply, so there is no excess demand or excess supply.
3
Q
definition of market disequilibrium
A
market disequilibrium exists if the price for a product is too high or too low.
4
Q
definition of price mechanism
A
the price mechanism refers to the system of relying on the market forces of demand and supply to allocate resources.
5
Q
the 3 economic questions
A
-what to produce
-whom to produce for
-how to produce
