theme 1.2.6 (price determination)

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Last updated 7:33 PM on 8/21/26
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7 Terms

1
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Market equilibrium

The point where market demand equals market supply

2
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Equilibrium price

The price where there is no excess demand or supply

3
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Equilibrium quantity

The quantity bought and sold at the equilibrium price

4
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Excess demand (shortage)

When price is below the equilibrium price

5
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Market correction in shortage

The shortage creates competition amongst buyers giving sellers the power to raise prices

6
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Excess supply (surplus)

When price is above the equilibrium price

7
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Market correction in surplus

When the sellers have unsold stocks leading them to lower prices to compete