Market Equilibrium Flashcards
what is market equilibrium
when supply meets demand at equilibrium prices and outposts are stable.
all products put up for sale will be cleared
supply extended from qe to q1 explain In order
demand ————-> price ———-> supply
inwards shift —–> decrease ————> decreases
d to d2————–> pe to p2 ———-> Qe to q2
END: this is how equilibrium is reached
demand extended explain in order
supply ————-> price ———-> demand
outwards shift —–> decrease ————> extension
s to s1————–> pe to p2 ———-> Qe to q2
END: this is how equilibrium is reached
competitive markets:
large no. of buyers
no single consumer or producer can influence the allocation of resources
producers and consumers behave rationally non-emotionally. aim to maximize welfare
competing supply
two producers producing similar or same product selling it at different or similar prices
market sector=
private sector=
controlled by gov
price mechanism
price=
value a good or service is exchanged at
what should you use at end of 9 marker for market equilibrium
it is evaluation point
S- signalling change in price acts as signal to producers and consumers.
I- incentives of firms make profit and increase sales of consumers maximize economics welfare
R-rationing function high demand for good or service which is limited price will remain high, supply of good restricted
A-all scarce resources allocated in market efficiently.
what is excess supply or surplus
where quantity supplied exceeds quantity demanded
what is excess demand or (shortage)
where quantity demanded exceeds quantity supplied
