Economics - Chapter 4
- Created by: sammilaw
- Created on: 02-11-14 15:39
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- CHAPTER 4: How a competitive market functions
- Equilibrium - the price at which demand is equal to supply and there is no tendency for change
- Disequilibrium - a situation within the market where supply does not equal demand
- Excess supply - when supply at a particular price is greater than demand; should signal to producers to lower prices
- Excess demand - when demand is greater than supply at a given price; should signal to increase prices
- Market-clearing price - the price at which all goods supplied will be demanded
- Maximum price - a price ceiling above which the price of a good/service is not allowed to increase
- Minimum price - a price floor below which the price of a good/service is not allowed to decrease
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