What is meant by the term market equilibrium?
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What is meant by the term market equilibrium?
Market equilibrium occurs when demand equals supply.
Define the term market clearing price.
The market clearing price is the price at which sellers are clearing (selling) their stock at an acceptable rate.
True or False?
The equilibrium price is where sellers and buyers are satisfied.
True.
At the equilibrium price, sellers will be satisfied with the rate and quantity of sales, and buyers will be satisfied that the product provides benefits worth paying for.
How is market disequilibrium defined?
Market disequilibrium occurs whenever there is excess demand or excess supply in a market.
What does the term excess demand mean?
Excess demand occurs when the demand is greater than the supply.
Define the term excess supply.
Excess supply occurs when the supply is greater than the demand.
What can cause excess demand?
Excess demand occurs when product prices are too low or when demand is so high that supply cannot keep up with it.
What causes excess supply?
Excess supply occurs when product prices are too high or when demand falls unexpectedly.
State the meaning of the term shortage.
A shortage occurs when there is excess demand in the market (Qd > Qs).
True or False?
Shortages arise when the price is above equilibrium.
False.
Shortages arise when the selling price is below equilibrium, whereas surpluses arise when the selling price is above equilibrium.
Define the term surplus.
Surplus is the term used when there is excess supply in the market (Qs > Qd).
What do demand and supply schedules show?
Demand and supply schedules show the quantity demanded and the quantity supplied of a product at different price levels.