Ch. 5

• What happens at market equilibrium?

  Price balances quantity demanded and supplied
• What is excess supply?

  When supply exceeds demand at the current price
• What characterizes excess supply?

  Firms supply more than consumers demand
• What is excess demand?

  When demand exceeds supply at the current price
• What characterizes excess demand?

  Consumers demand more than firms supply
• What is the role of firms in market equilibrium?

  Firms supply goods to meet demand