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What do you have when the actual price in a market is below the equilibrium price?
Wiki User
∙ 10y ago
Excess Supply
Wiki User
∙ 10y ago
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A shortage will develop when?
The market price is below the equilibrium price.
Why price ceiling and price floor is binding?
A price ceiling is binding when it is below the equilibrium price. It is the legal maximum price, so the market wants to reach equilibrium (which is above that) but can't legally. If it were above the equilibrium price it would not be binding because the market would reach equilibrium and the ceiling would have no effect. A price floor is binding when it is above the equilibrium price. You can use similar reasoning to that above. It is the legal minimum price. the market wants to reach equilibrium below that but can't legally.
Binding price floor in a market sets price?
below equilibrium price and causes a shortage
When the market price of a good is below its equilibrium value and all other determinants are unchanged?
When the market price is below its equilibrium value, with all else remaining equal, the demand for the good will rise, shifting the demand curve. The system will then move back into equilibrium with the new price and demand.
What happens is the price falls below the market clearing price and there is no equilibrium?
Quantity of demand increases and supplies decreases.
A shortage will develop when?
The market price is below the equilibrium price.
A shortage develop when?
The equilibrium quantity supplied is lower than the actual quantity supplied. The market price is below the equilibrium price.
Why price ceiling and price floor is binding?
A price ceiling is binding when it is below the equilibrium price. It is the legal maximum price, so the market wants to reach equilibrium (which is above that) but can't legally. If it were above the equilibrium price it would not be binding because the market would reach equilibrium and the ceiling would have no effect. A price floor is binding when it is above the equilibrium price. You can use similar reasoning to that above. It is the legal minimum price. the market wants to reach equilibrium below that but can't legally.
Binding price floor in a market sets price?
below equilibrium price and causes a shortage
When the market price of a good is below its equilibrium value and all other determinants are unchanged?
When the market price is below its equilibrium value, with all else remaining equal, the demand for the good will rise, shifting the demand curve. The system will then move back into equilibrium with the new price and demand.
What happens is the price falls below the market clearing price and there is no equilibrium?
Quantity of demand increases and supplies decreases.
What happens when the market price is lower than the equilibrium price?
When the market price is lower than the equilibrium price the price of the product will continue to rise. The price will rise until it equal the equilibrium price.
What happens when the equilibrium price is lower than the market price?
When the market price is lower than the equilibrium price the price of the product will continue to rise. The price will rise until it equal the equilibrium price.
When the market price is above equilibrium price the market price will be driven up by?
A
What situation can lead to excess demand?
Scarcity of the product, or if the price of the product has dropped. JohnnyChampagne's answer: When quantity demanded is more than quantity supplied. When the actual price in a market is below the equilibrium price, you have excess demand, because a low price encourages buyers and discourages sellers.
What is another term for market price?
equilibrium price
What is another word for market price?
equilibrium price
