Economics Review 4 Word Scramble

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Question	Answer
What is meant by the term market equilibrium?	Market equilibrium occurs when demand equals supply.
Define the term market clearing price.	The market clearing price is the price at which sellers are clearing (selling) their stock at an acceptable rate.
True or False? The equilibrium price is where sellers and buyers are satisfied.	True. At the equilibrium price, sellers will be satisfied with the rate and quantity of sales, and buyers will be satisfied that the product provides benefits worth paying for.
How is market disequilibrium defined?	Market disequilibrium occurs whenever there is excess demand or excess supply in a market.
What does the term excess demand mean?	Excess demand occurs when the demand is greater than the supply.
Define the term excess supply.	Excess supply occurs when the supply is greater than the demand.
What can cause excess demand?	Excess demand occurs when product prices are too low or when demand is so high that supply cannot keep up with it.
What causes excess supply?	Excess supply occurs when product prices are too high or when demand falls unexpectedly.
State the meaning of the term shortage.	A shortage occurs when there is excess demand in the market (Qd > Qs).
True or False? Shortages arise when the price is above equilibrium.	False. Shortages arise when the selling price is below equilibrium, whereas surpluses arise when the selling price is above equilibrium.
Define the term surplus.	Surplus is the term used when there is excess supply in the market (Qs > Qd).
What do demand and supply schedules show?	Demand and supply schedules show the quantity demanded and the quantity supplied of a product at different price levels.
What are dynamic markets?	Dynamic markets are real world markets that are constantly changing.
Define the term disequilibrium.	Disequilibrium occurs when there is excess demand or excess supply in a market.
How do market forces respond to disequilibrium?	Market forces seek to clear excess demand or supply.
What causes an increase in demand?	An increase in demand is caused by a change in the conditions of demand.
State the meaning of the term supply shock.	A supply shock is an unexpected event that changes the supply of a good or service, such as the 2011 tsunami in Japan, which created a global supply shock.
What is the impact of inflation on demand?	Inflation lowers real income, reducing the demand for normal goods and services.
What is the aim of a subsidy?	A subsidy is a payment from the government to the producer with the aim of increasing the supply of a good or service.
True or False? An increase in supply lowers the equilibrium price.	True. An increase in supply lowers the equilibrium price.
How do markets respond to excess demand?	Sellers usually raise prices in response to excess demand.
What is the market's response to excess supply?	Excess supply usually causes sellers to lower prices.

Created by: BethC