Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
14 Cards in this Set
- Front
- Back
|
Price controls |
legal restrictions on how high or low a market price can go |
|
|
Price ceiling |
- the maximum price sellers are allowed to charge for a good or service - typically imposed during crises |
|
|
Price floor |
the minimum price buyers are required to pay for a good or service |
|
|
Consequences of distorted prices |
they cannot give good information to buyers and sellers |
|
|
Deadweight loss |
the loss in total surplus that occurs whenever an action or a policy reduces the quantity transacted below the efficient market equilibrium quantity |
|
|
Inefficientallocation to consumers |
people who want the good badly and are willing to pay a high price don’t getit, and those who care relatively little about the good and are only willing topay a low price do get it |
|
|
Wastedresources |
peopleexpend money, effort, and time to cope with the shortages caused by the priceceiling |
|
|
Inefficientlylow quality |
sellersoffer low-quality goods at a low price even though buyers would prefer a higherquality at a higher price |
|
|
Blackmarket |
amarket in which goods or services are bought and sold illegally—either because it is illegal to sell themat all or because the prices charged are legally prohibited by a price ceiling |
|
|
Inefficientallocation of sales among sellers (price floor) |
thosewho would be willing to sell the good at the lowest price are not always thosewho actually manage to sell it |
|
|
Inefficientlyhigh quality (price floor) |
sellersoffer high-quality goods at a high price, even though buyers would prefer alower quality at a lower price |
|
|
The demand price of a given quantity |
theprice at which consumers will demand that quantity |
|
|
The supply price of a given quantity |
theprice at which producers will supply that quantity |
|
|
Quantity controls or quotas |
limitthe quantity of a good that can be bought or sold. The quantity allowed forsale is the quotalimit |
