market equilibrium: excess demand and excess supply

excess supply

If the price is above equilibrium, what occurs ?

a market in which the large numbers of buyers and sellers possess good market information and easily enter or leave a market

define competitive market

occurs when the quantity supplied equals the quantity demanded and there is no incentive to change (price does not change)

define equilibrium

when the market fails. Market plans for consumers and firms are inconsistent with each other

define market disequilibrium

refer to sheet

draw an AD/AS diagram showing excess demand

refer to sheet

draw an AD/AS diagram showing excess supply

barriers to entry

highly competitive markets lack what ?

excess demand

if the price is below equilibrium, what occurs ?

price will rise

what is the effect of excess demand ?

price will fall

what is the effect of excess supply ?