Flashcards in Equilibrium Market Prices Deck (10)
What does equilibrium mean?
Equilibrium exists where there is a state of balance and thus no tendency for change.
What is equilibrium price?
Equilibrium price is the price, where the amount consumers demand equals the amount producers supply.
Demand & supply are in balance.
How is equilibrium price set?
Market price occurs when demand equals supply.
Define excess supply
Excess supply exists when supply exceeds demand at a given price.
Define excess demand
Excess demand exists when demand exceeds supply at a given price.
Consumers are unable all the want at that price.
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.
What is a market surplus?
Supply exceeds demand at a given price, producers are unable to sell all they want at that price.
What does clearing price mean?
The market clearing price is the one price, which leaves neither unsold products nor unsatisfied demand in equilibrium price.
What is equilibrium output?
Equilibrium output is the amount traded at the equilibrium price.