LS10 - Price Determination

Question 1

Excess Demand

Answer 1

When the quantity demanded exceeds the quantity supplied at a given time.

Question 2

Excess Supply

Answer 2

When the quantity supplied exceeds the quantity demanded

Question 3

Equilibrium Price

Answer 3

When the supply meets the demand

Question 4

Supply and Demand diagram, X and Y

Answer 4

X axis - The output measured in units. Output(units)
Y axis - The price level measured in £ or $. Price Level (£)

Question 5

Supply

Answer 5

The quantity of a good or service that firms are willing to produce at a given time period

Question 6

Relationship between Price and Supply

Answer 6

As the price of a good increases, quantity supplied increases

Question 7

Relationship between Price and Demand

Answer 7

As the price of a good or service decreases, the quantity demanded increases

Question 8

Relationship between Supply and Demand

Answer 8

As the price level increases, Quantity supplied increases and Quantity Demanded decreases

Question 9

Bartering

Answer 9

Trading of goods between countries with no money involved.
Inefficient process because it takes lots of time and effort finding countries to barter with

Question 10

Most efficient method of training

Answer 10

Money

Question 11

When is Excess Demand Created

Answer 11

When price is et below equilibrium and is shown through a triangle below the graph.

Question 12

When is Excess Supply Created

Answer 12

Excess supply is created when the price is set above the equilibrium point because goods are now more expensive. Shown through a triangle above the equilibrium point