What is created in the market place by the interaction of demand and supply?
a market price
This interaction illustrates how consumer and producer decisions align.
At what price do the wishes of consumers and suppliers coincide in the example given?
€25
At this price, the quantity purchased and sold is 600 bales.
What happens to price if demand increases?
price will rise
Producers react to rising consumer demand by increasing prices.
What happens to price if supply increases?
price will fall
An increase in supply typically leads to a decrease in price.
True or false: It is possible for both demand and supply to change at the same time in a market.
TRUE
Changes in both demand and supply can occur simultaneously.
What occurs when the demand for a product is greater than the supply?
Excess demand
This situation occurs below the equilibrium price.
What occurs when the supply of a product is greater than the demand for it?
Excess supply
This situation occurs above the equilibrium price.
