Market equilibrium Flashcards
(17 cards)
what is market equilibrium in terms of supply and demand?
supply=demand
how does an increase in demand affect price and quantity?
demand curve moves to the right, price increases, quantity demanded and supplied increases- expansion in supply
how does an decrease in demand affect price and quantity?
demand curve moves to the left, price decreases, quantity demanded and supplied decreases- contraction in supply
how does an increase in supply affect price and quantity?
supply curve moves to the right, price decreases, quantity supplied and demanded increases- expansion in demand
how does an decrease in supply affect price and quantity?
supply curve moves to the left, price increases, quantity supplied and demanded decreases- contraction in demand
unregulated market may not achieve allocative ____ in all circumstances
thus market ____ exists
efficiency
failure
areas the government intervenes in (3)
health, education, defense, welfare, fair pay, regulations on businesses
price ceiling/ max price
___ price set by gov to stop producers from having __ ____ _____
examples (1)
maximum, too much control
medicine, water, milk, bread
price floor/ min price
____ price set by governments to provide producers a ______ ____
examples (1)
minimum
minimum income
minimum wages, agricultural price support schemes
what are merit goods?+one example
goods that are important for society but the market undervalues them to they are not produced in sufficient quantities
education, libraries, hospitals
what are demerit goods+one example
private goods with negative externalities that have an undesirable cost to society
smoking, drinking
government tries to __ demand of demerit goods through ___ taxes and ____ taxes
decrease
indirect
excise
what are public goods?
provided by society for free use and no one can be excluded from using them
beaches, sewage
externalities are actions that may ___ society ____ or ____
affect, positively or negatively
what are positive externalities?+example
benefits to public but they are not paid for by all of society
a building overlooking a stadium
what are negative externalities+ example?
goods that the public doesn’t pay for but negatively affects them
traffic near a busy workplace, pollution
indirect taxes
taxes where the person paying the tax is ___ the person who is ___ for the tax
basically the person who pays for the product is indirectly paying the tax for the product
encourages the ___ use of ___ resources or ___ consumption of ___ products
NOT, levied
responsible, scarce, control, harmful
