Market Equilibrium 4

Basic Characteristics of a Market

• When a supplier's cost=consumer's benefit, a sale occurs.
• The price mechanism exchanges information between the two parties: what it cost the producer and what utility it has.
• A product is in high demand when lots of costomers want to buy it.
• A product is in high supply if lots of suppliers want to sell it at a given price.

Price allows a market to clear by Rationing, Signalling and Incentivising.

Equlibrium between buyers and sellers determines a market price.

In competitive markets, there is a lot of price fluctuation to acheive…