What happens at the point where buyers and sellers agree? Use these terms in your answer: market equilibrium, equilibrium price, equilibrium quantity.

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01-04-2020
Social Studies

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What happens at the point where buyers and sellers agree? Use these terms in your answer: market equilibrium, equilibrium price, equilibrium quantity.

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enyo enyo · Answer 1 · 2020-04-03T19:33:47+02:00

Answer:

Market Equilibrium (price & quantity) is determined where : Market Demand = Market supply & the respective curves intersect.

Explanation:

Market is a place where buyers & sellers of good(s) interact for sale purchase transactions.

Market Equilibrium (price & quantity) is the point agreed by buyers & sellers. It is determined by Market Demand & Market Supply. Market demand denotes buyers' ability & willingness to buy, the curve is downward sloping due to price-demand inverse relationship. Market supply denotes sellers' ability & willingness to sell, the curve is upward sloping due to price-supply positive relationship.

Market is at equilibrium (price & quantity) where Market Demand = Market Supply & these curves intersect. If market price > equilibrium price; market supply > market demand, there is excess supply. It creates competition among sellers & reduces price, resumes equilibrium. If market price < equilibrium price; market demand > market supply, there is excess demand. It creates competition among buyers & raises price, resumes equilibrium.