CHAPTER 12 PRICE DETERMINATION Flashcards Preview

EDEXCEL THEME 1 MICRO ECONOMICS > CHAPTER 12 PRICE DETERMINATION > Flashcards

Flashcards in CHAPTER 12 PRICE DETERMINATION Deck (5)
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1
Q

Equilibrium price

A

The price in which there is no tendency to change because planned( or desired or ex ante) purchases (i.e. demand) are equal to planned sales (i.e. supply)

2
Q

Excess demand

A

Where demand is greater than supply

3
Q

Excess supply

A

Where supply is greater than demand

4
Q

Free market forces

A

Force in free markets which act to reduce prices when there is excess supply and raise prices when there are excess demand.

5
Q

Market-clearing price

A

The price at which there are neither excess demand nor excess supply but where everything offered for sale is purchased.