Market price: Difference between revisions
(Created page with '==Definition== The '''market price''' for a good, also termed its '''market-clearing price''', '''equilibrium price''', or the '''price at which it clears the market''', is the ...') |
No edit summary |
||
| Line 1: | Line 1: | ||
==Definition== | ==Definition== | ||
The '''market price''' for a good, also termed its '''market-clearing price''', '''equilibrium price''', or the '''price at which it clears the market''', is the price at which the [[demand]] for the good equals the [[supply]] of the good. The market price of a good depends on all the factors that influence the [[demand curve]] for the good as well as all the factors that influence the [[supply curve]] for the good. | The '''market price''' for a good, also termed its '''market-clearing price''', '''equilibrium price''', or the '''price at which it clears the market''', is the [[defining ingredient::price]] at which the [[defining ingredient::demand]] for the good equals the [[definin ingredient::supply]] of the good. The market price of a good depends on all the factors that influence the [[defining ingredient::demand curve]] for the good as well as all the factors that influence the [[defining ingredient::supply curve]] for the good. | ||
When the price of a good exceeds the market price, supply exceeds demand. This is a situation of [[excess supply]], or surplus. When the price of a good is less than the market price, demand exceeds supply. This is a situation of [[excess demand]], or scarcity. | When the price of a good exceeds the market price, supply exceeds demand. This is a situation of [[excess supply]], or surplus. When the price of a good is less than the market price, demand exceeds supply. This is a situation of [[excess demand]], or scarcity. | ||
==Graphical determination of market price== | |||
The market price of a good is graphically determined as the <math>p</math>-coordinate (the vertical coordinate, or price coordinate) of the intersection of the [[demand curve]] and the [[supply curve]]. The quantity of demand and supply at the price is the <math>q</math>-coordinate (the horizontal coordinate, or quantity coordinate). | |||
Revision as of 19:30, 25 March 2009
Definition
The market price for a good, also termed its market-clearing price, equilibrium price, or the price at which it clears the market, is the price at which the demand for the good equals the supply of the good. The market price of a good depends on all the factors that influence the demand curve for the good as well as all the factors that influence the supply curve for the good.
When the price of a good exceeds the market price, supply exceeds demand. This is a situation of excess supply, or surplus. When the price of a good is less than the market price, demand exceeds supply. This is a situation of excess demand, or scarcity.
Graphical determination of market price
The market price of a good is graphically determined as the -coordinate (the vertical coordinate, or price coordinate) of the intersection of the demand curve and the supply curve. The quantity of demand and supply at the price is the -coordinate (the horizontal coordinate, or quantity coordinate).
