Econ Flashcards
(10 cards)
the monetary value of a product.
Price
system of allocating goods and services without prices.
Rationing
a simplified version of a complex behavior expressed in the form of an equation, graph, or illustration.
Economic Model
price where quantity supplied equals quantity demanded.
Equilibrium Price
situation where quantity supplied is greater than quantity demanded at a given price.
Surplus
situation where quantity supplied is less than quantity demanded at a given price.
Shortage
the highest legal price that can be charged for a product.
Price Ceiling
the lowest legal price that can be paid for a product.
Price Floor
Advantages
Prices help producers and consumers answer the three basic questions of
WHAT, HOW, and FOR WHOM to produce.
Prices perform this function well for at least four reasons.
-neutrality
-flexibility
-familiarity
-efficiency
