Practice Equilibrium, Excess Demand, Excess Supply (5.1)

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9 questions

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6 sample questions

Question 1.
Define equilibrium in a market.
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Think about the balance point where buyers and sellers are satisfied.
Question 2.
What is excess demand?
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Consider a scenario where many people want to buy a limited product.
3Question 3.
What is equilibrium in a market?
- When demand exceeds supply
- When supply exceeds demand
- When supply equals demand
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Think about how buyers and sellers interact.
4Question 4.
True or False: Excess demand leads to an increase in market prices.
- True
- False
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Recall how prices respond when demand is high.
Question 5.
Assume a sudden increase in income for consumers leads to a higher demand for a normal good. How would this affect the equilibrium price and quantity? Include a graph.
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Consider the demand shifts process on your graph.
Question 6.
Analyze a scenario where the number of firms in a market increases significantly. Discuss the long-term effects on equilibrium price in a perfectly competitive setting.
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Reflect on how competition amongst firms typically influences pricing.

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