price determination (topic 2)

Draw a market equilibrium curve

What is price determination

The price mechanism is the process in a market economy where the interaction of supply and demand determines the prices of goods and services, thereby allocating scarce resources.

This system uses prices to signal where resources are needed, to provide incentives(determination) for producers and consumers to adjust their Behavior , and to ration goods among those willing and able to Pay

What is a full 6 marker: for a movement to The right of a price determination curve

Drawing a graph and explanation:

The …curve moves to the …because explanation and causes a shift from D-D1/S-S1 which caused an increase in price from p1-p2 which causes an increase in quantity from Q1-Q2

what is the meaning of market equilibrium

Market equilibrium is occurs when the quantity demanded of a product is equal to the quantity supplied

What is the definition of market disequilibrium

Occurs when the quantity demanded of a product is not equal to the quantity supplied of a Product so there is a surplus and shortage in the market

How to draw market surplus and market shortage graphs

What is another word for market surplus and what happens when this occurs

Excess supply and Too much stock left on the shelf,Price is set too high – profit

What is another word for market shortage and what happens when this occurs

Excess demand and Too many consumers and not enough stock(empty shelves ),Price is too low

How to turn market surplus to equilibrium

Lower the price

Consumers willing and able to buy

QD increases and QS decreases

(D Expansion & S Contraction)

How to turn market shortage to equilibrium

Rise price

Consumers less willing and able to buy

QD decreases and QS increases