Lesson 7: Market Equilibrium

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6 Terms

1
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Market Equilibrium

When the quantity demanded equals the quantity supplied (both suppliers and consumers are happy)

<p>When the quantity demanded equals the quantity supplied (both suppliers and consumers are happy) </p>
2
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Equilibrium Price

The price at which quantity demanded equals quantity supplied

3
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Equilibrium Quantity

The quantity bought and sold at the equilibrium price

4
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Surplus

A situation in which the quantity supplied exceeds the quantity demanded (competitive market forces will drive down the price)

<p>A situation in which the quantity supplied exceeds the quantity demanded (competitive market forces will drive down the price) </p>
5
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Shortage

A situation in which the quantity demanded exceeds the quantity supplied (competitive market forces will drive up the price)

<p>A situation in which the quantity demanded exceeds the quantity supplied (competitive market forces will drive up the price) </p>
6
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Equilibrium Quantity is NOT the same as..

supply (and/nor quantity supplied). Equilibrium quantity is the amount (quantity) where buyers and sellers are perfectly satisfied, where the market clears