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Economics 1.2.6 - Coggle Diagram
Economics 1.2.6
equilibrium
demand and supply curves intersect
market clears as there is no shortage or surplus
markets should always gravitate towards equilibrium price and quantity
if a determinant of demand or supply changes, a new equilibrium is formed
excess supply
too much supply for the demand
suggest prices are too high
prices will need to be bought down by suppliers in order to meet demand
downward pressure on prices
excess demand
too much demand for the supply
suggests that prices are too low
consumers will bid for higher prices which incentivises producers to supply more for higher profit
upward pressure on prices
market forces
incentives
to consumers to spend more
producers to supply more
rationing
to who is willing and able to buy
signalling
if price is too high or low