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Because at equilibrium, all demands are satisfied while there is no excess supply.
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∙ 13y ago
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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
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.
Market clearing price?
The price that exists when a market is clear of shortage and surplus, or is in equilibrium.
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.
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.
When the market price is above equilibrium price the market price will be driven up by?
A
A shortage will develop when?
The market price is below the equilibrium price.
What is another word for market price?
equilibrium price
What is another term for market price?
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.
Market clearing price?
The price that exists when a market is clear of shortage and surplus, or is in equilibrium.
What are the differences between a market in equilibrium and a market in disequilibrium?
equilibrium is the responsiveness of quantity demand to a change in price.
When market price is above equilibrium price?
When supply and demand are balanced
What do you have when the actual price in a market is below the equilibrium price?
Excess Supply
The market clearing price is most closely associated with?
the equilibrium price
