a) Equilibrium price and quantity
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9 Terms
state what prices are determined by
the laws of supply and demand
define market equilibrium
quantity demanded = quantity supplied
define market disequilibrium
state what causes market disequilibrium
state what market disequilibrium causes
quantity demanded of a product =/= quantity supplied of a product
price = below equilibrium price OR above equilibrium price
excess demand OR excess supply
define excess demand
state what causes excess demand
quantity demanded > quantity supplied
price = below equilibrium price
show excess demand on a graph
define excess supply
state what causes excess supply
quantity supplied > quantity demanded
price = too high
show excess supply on a graph
explain how market forces eliminate excess demand
firms increase prices to increase profit
contraction in quantity demanded + extension in quantity supplied
explain how market forces eliminate excess supply
firms decrease prices to increase profit
contraction in quantity supplied + extension in quantity demanded
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