Price Determination Flashcards
1
Q
What is the market price?
A
The price agreed for the sale of goods and services between buyers and sellers.
2
Q
What is the equilibrium (or market clearing) price?
A
The price at which supply meets demand - all products supplied are bought and no buyers are left disappointed.
3
Q
Where is the equilibrium price on a supply and demand diagram?
A
At the point where the demand curve and the supply curve intersect.
4
Q
When is there excess demand in the market?
A
When quantity demanded is greater than supply.
5
Q
When is there excess supply in the market?
A
When quantity supplied is greater than quantity demanded.
