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17 Cards in this Set
- Front
- Back
Production Process |
1. Purchase resources 2. transform resources into product 3. sale of goods/services in product market |
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Resource Market |
The market for inputs used to produce goods and services |
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labor market |
large component of a broader resource market |
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What causes labor markets to vary? |
skill, experience, occupational category |
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Price of resource increases leads to.. production cost? supply? price of goods/services? |
^ production cost lower supply ^ prices for goods and services |
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Price of resource changes, what happens to the price of goods and services produced with the resources? |
will change in the same direction |
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Demand for a product changes, what happens to the resources used to produce it? |
Resources used to produce it will change in the same direction |
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price controls |
government mandated prices that are generally imposed in the form of maximum or minimum legal prices |
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price ceilings |
a legally established maximum price sellers can charge for a good or resource |
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rent controls
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price ceiling intended to protect residents from high housing prices |
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Legislation requiring that workers be aid at least that state minimum hourly rate of pay |
Minimum Wage |
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What people are affected by minimum wage? |
Low skilled inexperienced workers with equilibrium rates lower than minimum wage |
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What 3 things does a higher minimum wage lead to? |
1) less convenient working hours 2) fewer training opportunities 3) less continuous employment |
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Markets that operate outside the legal systems in which either illegal goods are sold or legal goods are sold at illegal prices and terms |
Black market |
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What causes black markets to form? |
Price controls by the government |
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Economic analysis indicates that black markets have more or less defective products than a legal system? |
Higher incidence of defective products |
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Importance of legal structure for the market - 4 things |
1) provides secure private-property rights 2) contract enforcement 3) access to an unbiased court system for settling disputes |