ECON 1201 Chapter Notes - Chapter 4: Economic Equilibrium, Economic Surplus, Equilibrium Point

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ECON 1201 Full Course Notes

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Chapter 4: equilibrium: how supply and demand determine prices. Equilibrium - point where demand and supply curves meet, economic forces are put into play to push/pull the price and quantities to these values. At the meeting point there is an equilibrium price and equilibrium quantity. Surplus - a situation in which the quantity supplied is greater than the quantity demanded. Competition pushes prices down during a situation of surplus. Shortage - a situation in which the quantity demanded is greater than the quantity supplied. Competition drives prices up during a shortage. Equilibrium price - price at which the quantity demanded is equal to the quantity supplied. Price is stable here because quantity demanded = quantity supplied. Common misconception is sellers compete against buyers. But sellers actually compete with other sellers and buyers actually compete with other buyers. 4. 2 a free market maximizes producer plus consumer surplus (the gains from trade)

Related Questions

The point at which the supply curve and the demand curve intersect is called:

A. Equilibrium, because quantity demanded equals quantity supplied so there is no tendency for price to change.

B. Equilibrium, because quantity demanded exceeds quantity supplied so there is a shortage

C. Equilibrium, because quantity supplied exceeds quantity demanded so there is a surplus

D. Irrelevant, because real-world prices never reach this point

cyanhound711

1. Market equilibrium occurs when

a. demand equals supply

b. quantity demanded equals quantity supplied

c. The consumer expectations match the producer's expectations

d. Efficiency and equal distribution are achieved

2. If a surplus exists in a market, then

a. Price is above market equilibrium and quantity demanded is less than quantity supplied

b. Price is below market equilibrium and quantity demanded is less than quantity supplied

c. Price is above market equilibrium and quantity demanded is greater than quantity supplied

d. Price is below market equilibrium and quantity demanded is greater than quantity supplied

3. When the price falls below market equilibrium

a. A surplus occurs

b. A shortage occurs

c. There will be an increase in quantity supplied

d. There will be a leftward shift of the supply curve

amethysttrout886

A situation in which the quantity demanded is greater than the quantity supplied, then there is

A. A shortage and the price is above the equilibrium price.

B. A surplus and the price is below the equilibrium price.

C. A shortage and the price is below the equilibrium price.

D. A surplus and the price is above the equilibrium price.

lemoneel121

ECON 1201 Chapter Notes - Chapter 4: Economic Equilibrium, Economic Surplus, Equilibrium Point

ECON 1201 Full Course Notes

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