Ch. 4 Markets And Governments

Front 1

Production Process

Back 1

1. Purchase resources

2. transform resources into product

3. sale of goods/services in product market

Front 2

Resource Market

Back 2

The market for inputs used to produce goods and services

Front 3

labor market

Back 3

large component of a broader resource market

Front 4

What causes labor markets to vary?

Back 4

skill, experience, occupational category

Front 5

Price of resource increases leads to..

production cost?

supply?

price of goods/services?

Back 5

^ production cost

lower supply

^ prices for goods and services

Front 6

Price of resource changes, what happens to the price of goods and services produced with the resources?

Back 6

will change in the same direction

Front 7

Demand for a product changes, what happens to the resources used to produce it?

Back 7

Resources used to produce it will change in the same direction

Front 8

price controls

Back 8

government mandated prices that are generally imposed in the form of maximum or minimum legal prices

Front 9

price ceilings

Back 9

a legally established maximum price sellers can charge for a good or resource

Front 10

rent controls

Back 10

price ceiling intended to protect residents from high housing prices

Front 11

Legislation requiring that workers be aid at least that state minimum hourly rate of pay

Back 11

Minimum Wage

Front 12

What people are affected by minimum wage?

Back 12

Low skilled inexperienced workers with equilibrium rates lower than minimum wage

Front 13

What 3 things does a higher minimum wage lead to?

Back 13

1) less convenient working hours

2) fewer training opportunities

3) less continuous employment

Front 14

Markets that operate outside the legal systems in which either illegal goods are sold or legal goods are sold at illegal prices and terms

Back 14

Black market

Front 15

What causes black markets to form?

Back 15

Price controls by the government

Front 16

Economic analysis indicates that black markets have more or less defective products than a legal system?

Back 16

Higher incidence of defective products

Front 17

Importance of legal structure for the market - 4 things

Back 17

1) provides secure private-property rights

2) contract enforcement

3) access to an unbiased court system for settling disputes