chapter 9- price determination

Question 1

definition of market equilibrium

Answer 1

position where the quantity demanded of a product is equal to the quantity supplied of the product

Question 2

definition of equilibrium price

Answer 2

is the price at which the demand curve for a product intersects the supply curve for the product. the market is therefore cleared if any excess demand or supply

Question 3

definition of market disequilibrium

Answer 3

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

Question 4

definition of excess demand

Answer 4

refers to a situation where the market price is below the equilibrium price , thus creating a shortage in the market

Question 5

definition of a shortage

Answer 5

occurs when demand exceeds supply because the price is lower than the market equilibrium.

Question 6

definition of a surplus

Answer 6

created when supply exceeds demand because the price is higher than the market equilibrium price.

Question 7

definition of excess supply

Answer 7

refers to the situation where the market price is above the equilibrium price , thus creating a surplus in the market.

Question 7

definition of excess supply

Answer 7

refers to the situation where the market price is above the equilibrium price , thus creating a surplus in the market.