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The mechanism for equilibrium pricing is a function of the demand and supply dynamics of the marketplace. An increase or decrease in demand where supply is fixed will result in changes in the equilibrium pricing. Equilibrium prices can shift dramatically, but over the long-term, they tend to be relatively stable and only rising or falling within an acceptable range. These price fluctuations generally would not disrupt the business plan of a product or service producer. Assume that demand remains unchanged.

(A). What economic forces affect changes in demand?

(B). What economic forces affect changes in supply?

(C). Explain how shifts in demand or supply will affect changes in the equilibrium price.

 

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Anne Gillian Duero
Anne Gillian DueroLv10
28 Sep 2019

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Scenario Two

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After Hurricane Katrina, what happened to the price of fish?
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Q17. The term "recession" refers to a
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b. fall in the general level of real wages over two consecutive quarters
c. fall in the CPI over two consecutive quarters
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Q18. Cost changes generally lag behind price changes during the business cycle.
a. true
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