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Surplus means there will be excess supply, meaning demand will fall, and so will prices
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Market clearing price?
The price that exists when a market is clear of shortage and surplus, or is in equilibrium.
What happens to prices when there is a surplus?
the price goes down
What happens to consumer surplus if the price is above equilibrium?
When the price is above equilibrium, there is a surplus because supply is greater than demand. The price of the good will naturally decrease back to its equilibrium price where demand and suppy interesect, thus eliminating the surplus.
What happens to price when a shortage exists?
Consumers bid up the price.
As price falls along a particular demand curve what happens to consumer surplus?
it always increases
Market clearing price?
The price that exists when a market is clear of shortage and surplus, or is in equilibrium.
What happens to prices when there is a surplus?
the price goes down
What happens to consumer surplus if the price is above equilibrium?
When the price is above equilibrium, there is a surplus because supply is greater than demand. The price of the good will naturally decrease back to its equilibrium price where demand and suppy interesect, thus eliminating the surplus.
What happens to price when a shortage exists?
Consumers bid up the price.
As price falls along a particular demand curve what happens to consumer surplus?
it always increases
What happens When the government intervenes in the market by imposing price ceilings and price floors?
Shortages, Surplus and Unintended consequences.
Suppose the price of corn is 3.25 per bushel. is there a shortage or surplus of corn at that price?
there is a surplus
What is causes a surplus price ceiling or price floor?
A price floor can cause a surplus while a price ceiling can cause a shortage but not always.
Which causes the price of grain from the plains to fall?
A surplus in crops
What happens to surplus when revenue increases?
the customer surplus increase
How does the consumer surplus change as the equilibrium price of a good rises or falls?
As the equilibrium price of a good raises the producer surplus increases as well, and as the equilibrium price falls the producer surplus decreases accordingly.
How does a surplus or a shortage of a good or service affect the market price?
A surplus or a shortage of a good or service affects the market price directly. When there is a surplus, the prices goes down and when there is a shortage the price increases due to the demand levels.
