Market Equilibrium - Chapter 5
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Vocabulary flashcards covering key concepts of market equilibrium, shortages/surpluses, price controls, and related tools from the notes.
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8 Terms
Market equilibrium
The price-quantity combination at which the quantity demanded equals the quantity supplied; the intersection of the demand and supply curves.
Equilibrium price
The price at which quantity demanded equals quantity supplied (QD = QS).
Equilibrium quantity
The quantity demanded equals the quantity supplied at the equilibrium price.
Shortage
When quantity demanded exceeds quantity supplied (QD > QS) at the current price.
Surplus
When quantity supplied exceeds quantity demanded (QS > QD) at the current price.
Price ceiling
A government-imposed maximum price; a binding ceiling can create a shortage and artificial scarcity.
Price floor
A government-imposed minimum price; a binding floor can create a surplus and artificial excess supply.
Binding price control
A price control that prevents the market from reaching its natural equilibrium, leading to shortages or surpluses.