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If an Economy Is in Equilibrium at a Given Price

question 188

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If an economy is in equilibrium at a given price level and a given output level,the aggregate demand/aggregate supply (AD/AS) model indicates that an unanticipated decrease in aggregate demand will cause


Definitions:

Price Floor

A government or regulatory minimum price set above the equilibrium price, intended to protect producers.

Surplus

An excess amount of a product or resource relative to demand, often leading to lower prices or stockpiling.

Equilibrium Price

Equilibrium price is the price point at which the quantity of goods supplied equals the quantity of goods demanded in the market.

Price Ceiling

A legal maximum price that can be charged for a good or service, typically set by the government to ensure affordability.

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