Market

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Description and Tags

supply + demand

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20 Terms

1
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Surplus

excess supply

Qs > Qd

2
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Shortage

excess demand

Qd > Qs

3
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Equilibrium price (Market-clearing price)

price at which the Qd = Qs

4
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Equilibrium quantity

quantity that corresponds to equilibrium price

5
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Disequilibrium Price

a price other than equilibrium price

a price at which Qd does not = Qs

6
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Disequilibrium

a state of either surplus or shortage in a market

7
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Equilibrium

“at rest”

Qs = Qd

8
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lower the price

if a surplus exists

9
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raise the price

if a shortage exists

10
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Consumers’ surplus

difference between maximum price a buyer is willing and able to pay for a good or service and the price actually paid for it

Max buying price - price paid

11
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Producers’ surplus

difference between the price sellers receive for a good and the minimum/lowest price for which they would have sold the good

Price received - minimum selling price

12
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Total surplus

Consumers’ surplus + producers’ surplus

13
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demand rises, supply is constant

  • equilibrium price rises

  • change in price = Qs rises as well

  • upward movement in supply curve

<ul><li><p>equilibrium price rises</p></li><li><p>change in price = Qs rises as well</p></li><li><p>upward movement in supply curve</p></li></ul><p></p>
14
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demand falls, supply is constant

  • equilibrium price falls

  • change in price = Qs falls as well

  • downward movement in supply curve

<ul><li><p>equilibrium price falls</p></li><li><p>change in price = Qs falls as well</p></li><li><p>downward movement in supply curve</p></li></ul><p></p>
15
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supply rises, demand is constant

  • equilibrium price falls

  • change in price = Qd rises as well

  • downward movement in demand curve

<ul><li><p>equilibrium price falls</p></li><li><p>change in price = Qd rises as well</p></li><li><p>downward movement in demand curve</p></li></ul><p></p>
16
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supply falls, demand is constant

  • equilibrium price rises

  • change in price = Qd falls as well

  • upward movement in demand curve

<ul><li><p>equilibrium price rises</p></li><li><p>change in price = Qd falls as well</p></li><li><p>upward movement in demand curve</p></li></ul><p></p>
17
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demand rises, supply falls by equal amount

  • equilibrium price rises

  • equilibrium quantity remains constant

<ul><li><p>equilibrium price rises</p></li><li><p>equilibrium quantity remains constant</p></li></ul><p></p>
18
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demand falls, supply rises by equal amount

  • Equilibrium price falls

  • Equilibrium quantity is constant

<ul><li><p>Equilibrium price falls</p></li><li><p>Equilibrium quantity is constant</p></li></ul><p></p>
19
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demand rises by greater amount than supply falls

  • equilibrium price rises

  • equilibrium quantity rises

<ul><li><p>equilibrium price rises</p></li><li><p>equilibrium quantity rises</p></li></ul><p></p>
20
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demand rises by small amount that supply falls

  • equilibrium price falls

  • equilibrium quantity falls

<ul><li><p>equilibrium price falls</p></li><li><p>equilibrium quantity falls</p></li></ul><p></p>