Demand, Supply and Market Equilibrium Flashcards
What is the Equilibrium Price?
The Equilibrium Price is the point where the supply and demand curves intersect, where the amount supplied equals the amount demanded, resulting in a market-clearing price.
What is Total Revenue?
Total Revenue is the amount of money generated from the sale of goods or services. It is calculated by multiplying the price of the goods or services by the quantity sold.
How does the Equilibrium Price change with an increase in demand?
When demand increases, the Equilibrium Price increases as well.
How does the Equilibrium Price change with a decrease in demand?
When demand decreases, the Equilibrium Price decreases as well.
How does the Equilibrium Price change with an increase in supply?
When supply increases, the Equilibrium Price decreases.
How does the Equilibrium Price change with a decrease in supply?
When supply decreases, the Equilibrium Price increases.
What is Excess Demand?
Excess Demand occurs when the price of a good or service is below the Equilibrium Price, leading to a shortage of goods in the market.
Excess Supply
Excess Supply occurs when the price of a good or service is above the Equilibrium Price, leading to unsold goods in the market.
How can producers restore equilibrium in the market when there is an excess supply or demand?
Producers can restore equilibrium by changing the price or adjusting supply.
- They could employ more resources and increase supply,
- lower the price to reduce excess supply,
- or store the excess supply and release it later on the market.
What is demand?
Demand is the willingness of consumers to purchase a product at various prices over a period of time.
What are the factors that can lead to a change in demand?
The factors that can lead to a change in demand include changes in consumer taste, seasonality, external shocks, demographics, advertising, changes in the price of complementary goods, and changes in the prices of substitutes.
What is the difference between a movement and a shift in the demand curve?
A movement along the demand curve occurs due to a change in price, whereas a shift in the demand curve occurs due to a change in factors such as consumer taste, seasonality, or external shocks.
What happens to demand when the price of a product goes up?
When the price of a product goes up, demand for that product usually decreases, resulting in a contraction in demand.
What happens to supply when the price of a product increases?
When the price of a product increases, supply usually increases, resulting in an extension in supply.
What is supply?
Supply is the quantity of a product that suppliers are willing and able to sell at various prices over a period of time.
