Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
8 Cards in this Set
- Front
- Back
|
market equilibrium |
A situation in a market whereprice is such that quantity demanded by consumers exactly equals quantity suppliedby producers. |
|
|
comparative static analysis |
Comparative static analysisexamines the effect on equilibrium of a change in the external conditions affectinga market. |
|
|
price mechanism |
The means by whichdecisions of consumers and businesses interact to determine the allocation ofresources between different goods and services |
|
|
shortage/excess demand |
A situation where quantity demandedis greater than quantity supplied. This will result in upward pressure on price. |
|
|
surplus/excess supply |
A situation where quantity suppliedis greater than quantity demand. This will result in downward pressure on price. |
|
|
functions of the price mechanism |
How the price mechanismallocates resources efficiently by acting as a signal, a rationing device andan incentive |
|
|
consumer surplus |
the difference between the price consumers were willing and abel to pay and the price paid (the market price) |
|
|
producer surplus |
the difference between the price at which producers were willing to supply and the price actually received (the market price) |
