Reading...
Play button
Play button
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;
15 Cards in this Set
- Front
- Back
- 3rd side (hint)
|
What is Equilibrium?
|
The point at which quantity demanded and quantity supplied are equal.
|
A balancing point between price & quantity.
|
|
|
What is Disequilibrium?
|
Describes any price or quantity not at equilibrium; when quantity supplied is not equal to quantity demanded in a market.
|
Can produce one of two outcomes, excess demand or excess supply.
|
|
|
What is Excess Demand?
|
When quantity demanded is more than quantity supplied.
|
Occurs when actual price in a market is below equilibrium price due to low price encouraging buyers & discouraging sellers
|
|
|
What is Excess Supply?
|
When quantity supplied is more than quantity demanded.
|
Causes sellers to waste their resources when goods cannot be stored for long.
|
|
|
What is a Price Ceiling?
|
A maximum price that can be legally charged for a good or service. Ex. is rent control or fuel control to prevent inflation & price gouging
|
Government may place this on goods considered "essential" & might become too expensive for some consumers.
|
|
|
What is a Price Floor?
|
A minimum price for a good or service. Ex. Minimum Wage
|
Price supports in agriculture set minimum prices on some commodities. Ex. Gov. buying up excess crops from farmers.
|
|
|
What is Rent Control?
|
A price ceiling placed on rent.
|
Used to prevent rent inflation during housing crisis before & after WWII
|
|
|
What is Minimum Wage?
|
A minimum price that an employer can pay a worker for an hour of labor.
|
Must be above equilibrium rate, or it will have no effect because employees would have to pay at least eqilibrium rate anyway to find workers in a free market.
|
|
|
What is Surplus?
|
A situation in which quantity supplied is greater
than quantity demanded at a given price; also called Excess Supply. |
Corrected by letting price fall to point where quantity supplied and quantity demanded are equal, encouraging sales.
|
|
|
What is Shortage?
|
A situation in which quantity demanded is greater than quantity supplied; also called Excess Demand.
|
Appears in form of Search Costs (i.e., opportunity & financial costs consumers pay to search for a good/service.
|
|
|
What is Supply Shock?
|
A sudden shortage of a good.
|
Creats problem of excess demand when suppliers cannot meet needs of consumers.
|
|
|
What is Rationing?
|
A system of allocating scarce goods and services using criteria other than price.
|
The basis of Central Planning not a Free Market economy. Expensive & hard to organize.
|
|
|
What is the Black Market?
|
A market in which goods are sold illegally.
|
When people conduct business w/o regard for government controls on price/quantity.
|
|
|
What are Spillover Costs?
|
Costs of production that affect people who have no control over how much of a good is produced.
|
Negative externalities including cost of production (ex. air/water pollution) that spill over onto people having no control over product production
|
|
|
What are Search Costs?
|
The fiancial and opportunity costs consumers pay when searching for a good/service.
|
Ex. Driving to different stores or calling different towns vs. use of Internet Shopping on computer.
|
