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40 Cards in this Set

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