market equilibrium 0.0 / 5 ? Economicsmarket equilibriumASAQA Created by: meryemb12Created on: 06-03-20 17:38 equilibrium price and disequilibrium Equilibrium price the only price where the amount consumers want is equal to the amount producers want to sell if the market is at equilibrium -there is no need to move away supply and demand dictate the equilibrium quantity and price in a free market Disequilibrium when the market is not at a stable price and quantity if the market is not at equilibrium , economic pressure arises to move the market towards a stable price and quantity 1 of 4 excess supply and demand Excess supply and demand occur at disequilibrium the higher price makes it more profitable for petrol producers -output expands the difference between the quantity demanded and quantity supplied -is excess supply when quantity demanded exceeds quantity supplied =excess demand The pressure to reach equilibrium the market price is unstable when there is excess demand /supply excess supply will force producers to cut the price because of it. is better to sell at a lower price than not at all excess demand will signal producers that they can generate more profit by raising the price therefore excess demand and supply can lead to price change 2 of 4 equilibrium Determined by the forces of demand and supply in an economy Model of equilibrium assumes perfect competition and ceteris paribus (everything else equal) as well as independence between supply and demand. 3 of 4 interrelationship between markets Joint demand two goods are in joint demand if they are complementary an increase in the price of one good will cause a fall in the quantity demanded of the other Composite demand good that have a number of uses in the production process Derived demand the demand as a consequence of the demand for another good Joint supply an increase in the supply of a good increases the supply of a related good 4 of 4
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