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40 Cards in this Set
- Front
- Back
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Economic Model
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set of assumptions used to describe or predict behavior
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Price ceiling
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The maximum legal price that can be charged
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Rationing
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The allocation of linited supplies in wartime
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Surplus
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quantity supplied is greater than the quantity demanded at a given price
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Target Price
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Floor prices for farm products
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Price floor
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the lowest legal price that can be paid for a good or service
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Equilibrium price
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the price that "clears the market"
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Deficiency Payment
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makes up the difference between market price and target price
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Market Equilibrium
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prices are relatively stable and quantity supplied is equal to quantity demanded
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ration coupon
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ticket enabling the holder to purchase a product
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diminished incentives
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a negative effect of rationing
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minimum wage
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the lowest hourly pay that can legally be paid a worker
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CCC
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Federal agency set up to stabilize farm prices
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equilibrium
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the intersection of supply and demand
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price system
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signals information
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loss leader
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a bargain intended to attract customers
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fixed price
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when someone, usually the government, sets the price of a good or service
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shortage
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quantity demanded is greater than quantity supplied
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In a free market prices are usually the result of
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competition
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Because prices do not favor producers or consumers, they are described as
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neutral
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How does a market economy adjust to unexpected events?
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by adjusting consumption and production
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In a market economy what does a high price signal?
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that producers should produce more and consumers should buy less
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Name one advantage of a free market
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The market is able to find its own equilibrium.
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Name a characteristic of rationing
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It has a negative impact on people's incentive to work and produce
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What works to resolve the problems of surpluses and shortages?
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Price flexibility
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If a competitve market is at equilibrium and there is a sudden increase in demand what happens?
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a temporary shortage will occur and prices will rise
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When will relatively small changes in supply with will have the least impact on price?
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when demand is elastic
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rebate
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when manufacturers return part of the original payment to the buyer.
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Government planners allocating resources and products is an example of a
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command economy
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How do consumers adjust to unexpected price changes?
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by adjusting their buying habits.
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When are prices neutral?
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when they do not favor the producer or consumer
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What is price competition a characteristic of?
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market economy
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When does suprlus occur?
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when the quantity supplied is greater than the quantity demanded
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In a market economy what is a low price a signal for?
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It is a signal for producers to offer less and consumers to buy more.
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What is an advantage of a free market?
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Price flexibility
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What are problems with rationing?
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fairness and high administrative costs
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Price flexibility can solve what?
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temprorary market surpluses and shortages
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What are deficiency payments
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Part of a federal program to assist farmers
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Rebate
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a partial refund of the original price
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Prices serve as a link between producers and ___________
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consumers
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