supply meets demand Flashcards
1
Q
supply meets demand
A
as price rises there is a contraction in demand but also an extension in supply equally a contraction in supply and an extension in demand
2
Q
what does the two supplies together create
A
a market
3
Q
equilibrium excess supply
A
excess supply/surplus is the distance between supply and demand at the given price therefore producers will decrease his price to increase quantity demanded
e.g. in Christmas sales at the end of the period producers will decrease prices to get rid of excess supply
4
Q
price mechanism
A
due to excess demand and supply we always end up at our e
5
Q
A
