Determination of Equilibrium Market Prices (AQA A-Level Economics): Flashcards
📚Flashcards
Practise the cards
10 cards from this deck
ShowHide
Practise the cards
10 cards from this deck
Market equilibrium
Market equilibrium
Where quantity demanded equals quantity supplied
Market disequilibrium
Market disequilibrium
When market forces are not in balance
Excess supply (surplus)
Excess supply (surplus)
When price is above equilibrium; unsold stock results
Excess demand (shortage)
Excess demand (shortage)
When price is below equilibrium; unmet demand results
Equilibrium price (P*)
Equilibrium price (P*)
Price where demand and supply curves intersect
Effect when supply increases
Effect when supply increases
Equilibrium price falls, quantity rises
Effect when demand increases
Effect when demand increases
Both equilibrium price and quantity rise
Market response to excess supply
Market response to excess supply
Producers reduce prices to eliminate surplus
Market response to excess demand
Market response to excess demand
Price rises as buyers compete; shortage eliminated
Normal good
Normal good
Good with demand rising as consumer incomes increase