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Flashcards in Equilibrium Market Prices Deck (10)
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1

What does equilibrium mean?

Equilibrium exists where there is a state of balance and thus no tendency for change.

2

What is equilibrium price?

Equilibrium price is the price, where the amount consumers demand equals the amount producers supply.
Demand & supply are in balance.

3

How is equilibrium price set?

Market price occurs when demand equals supply.

4

Define excess supply

Excess supply exists when supply exceeds demand at a given price.

5

Define excess demand

Excess demand exists when demand exceeds supply at a given price.
Consumers are unable all the want at that price.

6

Explain market shortage

Shortages occur in markets when demand exceeds supply at a given price.
Consumers are unable to buy all they want at that price.

7

What is a market surplus?

Supply exceeds demand at a given price, producers are unable to sell all they want at that price.

8

What does clearing price mean?

The market clearing price is the one price, which leaves neither unsold products nor unsatisfied demand in equilibrium price.

9

What is equilibrium output?

Equilibrium output is the amount traded at the equilibrium price.

10

What causes a change in market price?

Market price changes in response to a change in 1 of the underlying non-price conditions of supply or demand