ECON Module 4

Shortages and surpluses are represented by the:

horizontal distance between the quantity demanded and the quantity supplied

Increased scarcity and inefficiency will result when:

the market is in disequilibrium

A shortage occurs when:

the quantity of output demanded is greater than the quantity of output supplied at the current market place

A surplus occurs when:

the quantity of output supplied is greater than the quantity of output demanded at the current market price

When the quantity supplied of a good, service, or resource equals the quantity demanded, this quantity traded is known as the:

Equilibrium quantity

For a market to reach equilibrium,

-Consumers need information about different suppliers' prices -Firms must be able to change the prices of their goods -Firms must be able to monitor inventories

Characteristics of Equilibrium Include:

-Qs=Qd -Qs=Qd

Quantity of output supplied is greater than the quantity of output demanded at the current market price:

Surplus

In equilibrium:

The supply and the demand are equal