Chapter 5: Bringing demand and supply together in a competitive market 0.0 / 5 ? EconomicsMarket failureASAQA Created by: Asiyah NCreated on: 05-08-16 17:23 Competitive market A market in which the large number of buyers and sellers possess good market information and easily enter or leave the market 1 of 9 Equilibrium A state of rest or balance between opposing forces 2 of 9 Market equilibrium When planned demand equals planned supply in the market 3 of 9 Excess supply When firms wish to sell more than consumers wish to buy, with the price above equilibrium price 4 of 9 Market disequilibrium When the market fails to clear. The market plans of consumers and firms are inconsistent with each other 5 of 9 Excess demand When consumers wish to buy more than firms wish to sell, with the price below the equilibrium price 6 of 9 Incentive function Prices create incentives for consumers and firms to behave in certain ways 7 of 9 Rationing or allocative function Prices allocate scarce resources between competing users 8 of 9 Signalling function Prices provide information to buyers and sellers 9 of 9
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