0
What else can I help you with?
What happens to prices set below market equilibrium?
There are a number of things that will happen to prices set below market equilibrium. They will cause a high demand and this will result in limited supply due to the low prices.
What happens if price falls below the market clearing price?
Quantityi demand increas while quantity supply decrease.
A shortage will develop when?
The market price is below the equilibrium price.
Where is the price ceiling located on a graph depicting market equilibrium?
The price ceiling is located below the equilibrium price on a graph depicting market equilibrium.
What happens if the current price is below the equilibrium?
He or She will be arrested.
What happens to prices set below market equilibrium?
There are a number of things that will happen to prices set below market equilibrium. They will cause a high demand and this will result in limited supply due to the low prices.
What happens if price falls below the market clearing price?
Quantityi demand increas while quantity supply decrease.
A shortage will develop when?
The market price is below the equilibrium price.
Where is the price ceiling located on a graph depicting market equilibrium?
The price ceiling is located below the equilibrium price on a graph depicting market equilibrium.
What happens if the current price is below the equilibrium?
He or She will be arrested.
Where is the consumer surplus located on a graph depicting market equilibrium?
Consumer surplus is located above the market price and below the demand curve on a graph depicting market equilibrium.
What do you have when the actual price in a market is below the equilibrium price?
Excess Supply
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.
A shortage develop when?
The equilibrium quantity supplied is lower than the actual quantity supplied. The market price is below the equilibrium price.
What happens to the market when a price ceiling is imposed?
If the price ceiling is above equilibrium: no effect. If the price ceiling is below equilibrium: price lowers to the ceiling level and supply falls. There is too much demand for the current level of supply. A black market forms to capture unmet demand at high prices.
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
