The market is considered to be _____ (black market/equilibrium/disequilibrium/non-competitive) if quantity demanded does not equal quantity supplied.
I'm not sure what the answer is... I narrowed it down to either disequilibrium or non-competitive. Disequilibrium because Qd =/= Qs. Non-competitive because if it's not in equilibrium, then that means the firms are not price takers in the market.
What is the right answer?
My son (who works in/on the market) writes:
"I would stick with disequilibrium. Is that really a word?
"The market is always either undersupplied or oversupplied. This is what makes stocks move up or down."
I agree; disequilibrium.
The correct answer is "disequilibrium."
In economics, the term "equilibrium" refers to a state where the quantity demanded (Qd) of a product or service is equal to the quantity supplied (Qs), resulting in a balance between the buyers and sellers in the market. This equilibrium point is where prices and quantities stabilize.
If the quantity demanded does not equal the quantity supplied, it indicates an imbalance in the market and thus a state of disequilibrium. In other words, there is an excess demand or excess supply, which leads to fluctuations in prices and quantities.
On the other hand, "non-competitive" refers to a market structure where firms have some degree of control over the prices they charge. This can occur in both equilibrium and disequilibrium situations. Therefore, while disequilibrium implies a non-competitive market, it does not necessarily mean that the market is non-competitive.
To determine whether a market is in disequilibrium, you would need to compare the quantity demanded and quantity supplied at a given price. If they are not equal, the market is in a state of disequilibrium.