Market Equilibrium Concepts

These flashcards cover key concepts related to market equilibrium, including definitions of terms like equilibrium price, surplus, and price controls.

Equilibrium

A situation in which opposing forces balance each other, specifically the balance of price between buyers and sellers.

Equilibrium Price

The price at which the quantity demanded equals the quantity supplied.

Equilibrium Quantity

The quantity of a good that is bought and sold at the equilibrium price.

Surplus

A condition where quantity supplied exceeds quantity demanded at a given price.

Shortage

A situation where quantity demanded exceeds quantity supplied at a given price.

Price Ceiling

A maximum price set by the government that can be charged for a product, resulting in a shortage.

Price Floor

A minimum price set by the government that can be charged for a product, resulting in a surplus.

Market Mechanism

The use of supply and demand to determine prices and allocate resources.

Demand Curve Shift

When there is an increase or decrease in demand that causes the demand curve to move rightward or leftward.

Supply Curve Shift

When there is an increase or decrease in supply that causes the supply curve to move rightward or leftward.

Price Adjustment

Changes in price in response to surpluses or shortages until market equilibrium is reached.