2281 · 2.5
Price determination — FAQ
Frequently asked questions for 2281 Price determination. Direct answers first, then deeper explanation — then practise with marking.
Why is the equilibrium price the only price that lasts?
At any higher price a surplus builds up and sellers cut prices; at any lower price a shortage appears and sellers raise them. Only at equilibrium is there no surplus or shortage, so no reason for price to change.
Is a surplus the same as excess supply?
Yes. Both mean that at the current price the quantity supplied exceeds the quantity demanded. A shortage and excess demand are likewise the same thing.
What if the schedule has no row where the quantities are equal?
The equilibrium lies between the last price with a shortage and the first with a surplus. State the two prices it lies between, or draw the curves and read the intersection.