3.3.5 The determination of equilibrium market prices

• At the equilibrium price, there is no excess supply or demand.


  True
• What is the sequence of events when demand for a product increases and shifts the demand curve to the right?

  1️⃣ Demand curve shifts right

  2️⃣ Equilibrium price and quantity increase

  3️⃣ Market adjusts to new equilibrium
• The equilibrium market price ensures efficient resource allocation
• The demand curve typically slopes downward from left to right.


  True
• Match the feature of the demand curve with its description:

  Downward Slope ↔️ Inverse relationship between price and quantity demanded

  Shifts ↔️ Changes in quantity demanded at the same price
• The supply curve typically slopes upward from left to right, indicating that as the price increases, the quantity supplied increases
• Arrange the factors influencing the supply curve in order of their primary impact, from most direct to least direct.

  1️⃣ Production costs

  2️⃣ Technology

  3️⃣ Number of sellers

  4️⃣ Expectations about future prices

  5️⃣ Price of related goods
• At the equilibrium price, there is no excess supply or demand.


  True
• The equilibrium market price ensures efficient resource allocation
• Match the concept with its description:

  Supply ↔️ Quantity producers sell at various prices

  Demand ↔️ Quantity consumers buy at various prices

  Equilibrium ↔️ Supply equals demand
• The downward slope of the demand curve reflects the inverse relationship between price and quantity demanded.

  True
• What are three factors influencing the demand curve?

  Consumer income, preferences, price expectations
• Arrange the features of the supply curve in order of their primary impact, from most direct to least direct.

  1️⃣ Upward slope

  2️⃣ Shifts
• What are the factors that influence the supply curve?

  Production costs, technology, number of sellers, expectations about future prices, price of related goods
• The upward slope of the supply curve reflects a direct relationship between price and quantity supplied.


  True
• What does the supply curve illustrate?

  Relationship between price and quantity supplied
• The equilibrium point occurs where the supply curve and demand curve intersect.


  True
• Order the steps to determine the equilibrium point in a market:

  1️⃣ Identify the supply and demand curves

  2️⃣ Find the point of intersection

  3️⃣ Determine the equilibrium price

  4️⃣ Determine the equilibrium quantity
• At a price of $5, if suppliers are willing to sell 20 units and consumers are willing to buy 20 units, the equilibrium price is $5.


  True
• The equilibrium quantity corresponds to the equilibrium price
• In the example given, what is the equilibrium price and quantity?

  Price: $5, Quantity: 20
• The equilibrium market price is the price at which supply equals demand
• Match the concept with its definition:

  Equilibrium Price ↔️ Price at which supply equals demand

  Equilibrium Quantity ↔️ Quantity at which supply equals demand
• Changes in production costs can shift the supply curve to the left.

  True
• Match the concept with its definition:

  Supply ↔️ Quantity producers are willing to sell

  Demand ↔️ Quantity consumers are willing to buy
• The downward slope of the demand curve shows an inverse relationship between price and quantity
• What is the sequence of events when production costs for a good decrease?

  1️⃣ Supply curve shifts right

  2️⃣ Equilibrium price decreases and quantity increases

  3️⃣ Market adjusts to new equilibrium
• The upward slope of the supply curve reflects the direct relationship between price and quantity supplied.

  True
• The equilibrium point occurs where the supply curve and demand curve intersect
• What is the equilibrium quantity if the equilibrium price is $5 and both suppliers and buyers are willing to trade 20 units?

  20 units
• The equilibrium market price is also known as the market-clearing price.

  True
• What happens to prices if demand exceeds supply?

  Prices rise
• Shifts in the demand curve can be caused by changes in consumer income, preferences, or the price of related goods
• A decrease in production costs will cause the supply curve to shift to the right
• If production costs decrease, the supply curve will shift to the right
• Match the feature of the supply curve with its description:

  Upward Slope ↔️ Reflects direct relationship between price and quantity supplied

  Shifts ↔️ Caused by changes in factors other than price
• What is the equilibrium price in a market?

  Price at which supply equals demand
• The equilibrium quantity is the quantity at which supply equals demand
• What is the equilibrium price defined as?

  Price at which supply equals demand
• The equilibrium price is the price at which there is no excess supply or demand.


  True