⚖️ Equilibrium Prices
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7 Terms
1
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Q: What is market equilibrium?
A: The point where quantity demanded equals quantity supplied.
2
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Q: What happens when there is excess supply?
A: Price falls due to unsold inventory.
3
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Q: What happens when there is excess demand?
A: Price rises due to shortages.
4
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Q: What is the effect of a demand increase on equilibrium?
A: Both price and quantity increase.
5
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Q: What is the effect of a supply increase on equilibrium?
A: Price falls, quantity increases.
6
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Q: How does a shift in demand affect revenue?
A: Always changes revenue in the same direction.
7
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Q: How does a shift in supply affect revenue?
A: Ambiguous—it depends on relative changes in price and quantity.
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