How a competitive market functions

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Equilibrium
the price at which demand is equal to supply and there is no tendency for change
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Disequilibrium
a situation within the market where demand is unequal to supply
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Excess supply
When supply is greater than demand at a particular price level; this should signal to producers to lower prices and may make some producers leave the market
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Excess demand
when demand is greater than supply at a particular price level; this may raise prices which could lead to
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Minimum price
a price floor below which the price of a good or service is not allowed to decrease
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Maximum price
a price ceiling above which the price of a good or service is not allowed to increase
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Market-clearing price
the price at which all goods that are supplied will be demanded
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Other cards in this set

Card 2

Front

a situation within the market where demand is unequal to supply

Back

Disequilibrium

Card 3

Front

When supply is greater than demand at a particular price level; this should signal to producers to lower prices and may make some producers leave the market

Back

Preview of the back of card 3

Card 4

Front

when demand is greater than supply at a particular price level; this may raise prices which could lead to

Back

Preview of the back of card 4

Card 5

Front

a price floor below which the price of a good or service is not allowed to decrease

Back

Preview of the back of card 5
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