Google
Thursday 
April 26, 2018 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
INDUCED EXPENDITURE: An aggregate expenditure (consumption, investment, government purchases, and net exports) that depends on national income or gross domestic product. These four aggregate expenditures are conveniently separated into two types, induced, which is our current topic of expenditures unrelated to national income or GDP, and autonomous expenditures, expenditures which are unrelated to national income or GDP. Induced expenditures are graphically depicted as the slope of the aggregate expenditures line, and depend in large part on the marginal propensity to consume. The induced relation between income and expenditures form the foundation of the multiplier effect triggered by changes in autonomous expenditures.

Visit the GLOSS*arama


DISEQUILIBRIUM PRICE:

A price that does not achieve equilibrium in the market. A disequilibrium price is either above or below the equilibrium price. A price below the equilibrium price creates a shortage and a price above the equilibrium price creates a surplus. In both case, the market imbalance prompts the price to change, moving toward the equilibrium price.
A disequilibrium price is any price that does not achieve a balance between the market forces of demand and supply. More specifically, the quantity demanded is not equal to the quantity supplied. If quantity demanded exceeds quantity supplied, then a shortage exists. If quantity supplied exceeds quantity demanded, then a surplus exists.

Out of Balance

The 8-Track Tape Market
Disequilibrium prices that create surpluses and shortages can be illustrated using the market for 8-track tapes displayed in this exhibit. This graph was generated after long hours attending the 88th Annual Trackmania 8-Track Tape Collectors Convention at the Shady Valley Exposition Center.
  • 30 Cent: Consider first how a shortage is created at a 30 cent price. Click the [30 Cent] button to highlight this price. At 30 cents, the quantity demanded is 600 tapes and the quantity supplied is 200 tapes. This price does not generate equilibrium. The buyers want to buy 600 tapes, but only 200 tapes are offered for sale by the sellers. This shortage motivates buyers to offer a higher price.

  • 70 Cent: Now consider how a surplus is created at a 70 cent price. Click the [70 Cent] button to highlight this price. At 70 cents, the quantity demanded is 200 tapes and the quantity supplied is 600 tapes. This price does not generate equilibrium, either. The sellers want to sell 600 tapes, but only 200 tapes are being purchased by the buyers. This surplus motivates sellers to charge a lower price.
For sake of completeness and for purposes of comparison, the equilibrium condition in the market can be identified by clicking the [Equilibrium] button. Doing so reveals an equilibrium price of 50 cents and an equilibrium quantity (without shortage or surplus) of 400 tapes.

<= DISEQUILIBRIUM, LONG-RUN AGGREGATE MARKETDISEQUILIBRIUM, SHORT-RUN AGGREGATE MARKET =>


Recommended Citation:

DISEQUILIBRIUM PRICE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: April 26, 2018].


Check Out These Related Terms...

     | market disequilibrium | market equilibrium | equilibrium price | shortage | surplus | equilibrium | self correction, market | equilibrium quantity | market clearing | stable equilibrium | unstable equilibrium |


Or For A Little Background...

     | market | demand | supply | demand curve | supply curve | demand price | supply price | demand space | supply space | quantity demanded | quantity supplied | law of demand | law of supply |


And For Further Study...

     | comparative statics | market demand | market supply | exchange | competitive market | production possibilities | invisible hand | ceteris paribus | market-oriented economy | marginal analysis |


Search Again?

Back to the WEB*pedia


APLS

ORANGE REBELOON
[What's This?]

Today, you are likely to spend a great deal of time surfing the Internet trying to buy either a computer that can play video games and burn DVDs or a black duffle bag with velcro closures. Be on the lookout for rusty deck screws.
Your Complete Scope

This isn't me! What am I?

Parker Brothers, the folks who produce the Monopoly board game, prints more Monopoly money each year than real currency printed by the U.S. government.
"Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations. "

-- Steve Jobs, Apple Computer founder

LOCH
London Options Clearing House
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2018 AmosWEB*LLC
Send comments or questions to: WebMaster