The Determination Of Market Equilibrium
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8 Terms
In a market system, what are goods/services determined by?
The Interaction of Demand and Supply
What is a Market?
Any place that brings buyers and sellers together
This can be physical (mcdonals) or virtual (ebay)
What will sellers be satisfied with at Equilibrium Price?
The rate/quantity of sales
What will buyers be satisfied with at Equilibrium Price?
With the utility that the product provides.
Utility - satisfaction from a good/service
When does Equilibrium occur in a market?
when Demand = Supply
When does Disequilibrium occur?
Whenever there is Excess Demand (demand>supply) or Excess supply (demand<supply) in a market
When can Excess Demand occur?
When demand is greater than the supply.
For example when prices are too low, or when demand is so high that supply cannot keep up with it.
When can Excess Supply occur?
When the Supply is greater than the Demand
For example, when prices are too high or when demand falls unexpectedly
