What's it: A supply shock is a sudden and unexpected event causing a dramatic change in output. It can be positive or negative. It is positive if it increases output and negative if it decreases output. Shocks here can refer to macroeconomic
Market Equilibrium
Auction: Meaning and Types
What's it: An auction is a selling method where prices have not yet been set and are determined through an open and competitive bidding process. The auctioneer acts as the selling agent in most cases and receives a commission on the sale
Market Failure: Types, Effects, and Solutions
What's it: Market failure refers to a condition in which the market mechanism doesn't work, thus creating inefficiency in the market. Demand, supply, and price aren't in equilibrium. As a result, markets fail to allocate economic resources most
Market Equilibrium: Meaning, How It Works
Market equilibrium occurs when the quantity demanded is equal to the quantity supplied. In a curve, it represents the point of intersection between the demand curve and the supply curve. At the equilibrium point, the market determines prices and
Excess Supply: Meaning, How to Calculate, Causes, Impacts
Excess supply occurs when the quantity supplied is higher than the quantity demanded. In this situation, price is above the equilibrium price, and, therefore, there is downward pressure on the price. This term also refers to production surplus,
Excess Demand: Meaning, How to Calculate, Causes
Excess demand occurs when the quantity demanded exceeds the quantity supplied. In this situation, the market price is below the equilibrium price. And, when the mechanism works, the price will rise towards its new equilibrium. The term we also
Supply: Meaning, Factors Affecting It
In economics, supply represents the quantity that producers are willing and able to supply at a certain price. That is a fundamental economic concept besides demand. Producers exist to meet consumer demand. If the individual motive is satisfaction
Demand in Economics: Meaning and Determinants
What's it: Demand refers to our willingness and ability - as consumers - to buy a product or service. Two keywords we need to remember: willingness and ability to buy. Both keywords must be present for the demand to occur. For example, we