Chapter 6: Prices Flashcards Preview

Economics > Chapter 6: Prices > Flashcards

Flashcards in Chapter 6: Prices Deck (16)
Loading flashcards...
0
Q

disequilibrium

A

describes any price or quantity not at equilibrium; when quantity supplied is not equal to quantity demanded in a market

1
Q

equiulibrium

A

the point at which quantity demanded and quantity supplied are equal

2
Q

excess demand

A

when quantity demanded is more than quantity supplied

3
Q

excess supply

A

when quantity supplied is more than quantity demanded

4
Q

Disequilibrium produces what two outcomes?

A

excess demand or excess supply

5
Q

price ceiling

A

a maximum price that can be legally charged for a good or service

6
Q

price floor

A

a minimum price for a good or service

7
Q

rent control

A

a price ceiling placed on rent

8
Q

minimum wage

A

a minimum price that an employer can pay a worker for an hour of labor

9
Q

shortage

A

situation in which quantity demanded is greater than quantity supplied; also known as excess demand

10
Q

search costs

A

the financial and opportunity costs consumers pay when searching for a good or service

11
Q

What are the advantages of prices?

A

Prices as an Incentive (communicate whether goods are in short supply or readily available)
Prices as Signals
Flexibility
The Price System is “Free”

12
Q

supply shock

A

a sudden shortage of a good

13
Q

rationing

A

a system of allocating scarce goods and services using criteria other than price

14
Q

black market

A

a market in which goods are sold illegally

15
Q

spillover costs

A

costs of production that affect people who have no control over how much of a good is produced