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Goldwasser AP Microeconomics Name _______________ Module 7 – Supply and Demand: Equilibrium 1. Define equilibrium. ______________________________________________________ ______________________________________________________ 2. What is the easiest way to find the equilibrium price and quantity? ______________________________________________________ ______________________________________________________ 3. Why do all sales and purchases in a competitive market take place at the same price? ______________________________________________________ ______________________________________________________ 4. Why does the market price fall if it is above the equilibrium price? ______________________________________________________ ______________________________________________________ 5. Why does the market price rise if it is below the equilibrium price? ______________________________________________________ ______________________________________________________ 6. Explain the difference between a surplus and shortage. ______________________________________________________ ______________________________________________________ 7. What happens to price and quantity when there an increase in demand? A decrease? ______________________________________________________ ______________________________________________________ 8. What happens to price and quantity when there an increase in supply? A decrease? ______________________________________________________ ______________________________________________________ 9. What happens when supply and demand both increase? Both decrease? ______________________________________________________ ______________________________________________________ 10. What happened when supply increases and demand decreases? When supply decreases and demand increases? ______________________________________________________ ______________________________________________________ REVIEW