Chapter 6 Econ.

Black Market

A market in which goods are sold illegally. EX: buying bootleg movies on the street.

Price ceiling

A maximum price that can be legally charged for a good or service. EX: Rent control.

Minimum Wage

A minimum price that an employer can pay worker for an hour of labor. EX: McDonald's workers don't get under paid.

Rent control

A price ceiling placed on rent. EX: can only increase at certain percentage.

Supply shock

A sudden shortage of a good. EX: gas shortage.

Rationing

A system of allocating scarce goods and services using criteria other than price. EX: during WW1 they used ration books.

Spillover Costs

Costs of production that affects people who have no control over how much of a good is produced. EX: air pollution. An externality.

DisEquilibrium

Describes any price or quantity not at equilibrium when quantity supplied is not equal to the quantity demanded market. EX: more pizza is made than bought.

Search cost

Financial and opportunity cost consumers pay when searching for good or service. EX: driving to different stores.

Price floor

Minimum price for a good or service. EX: minimum wage.

Surplus

Situation in which quantity supplied is greater than quantity demanded. also known as excess supply. EX: more pizza made than sold.

Shortage

Situation which quantity demanded is greater than quantity supplied also known as excess demand. EX: more costumers than pizza.

Equilibrium

The point at which quantity demanded and quantity supplies are equal. EX: the amount of pizza produced is always the same amount bought.

Excess demand

When quantity demanded is more than quantity supplied. EX: more customers than pizza.

Excess supply

When quantity supplied is more than quantity demanded EX: more pizza than costumers.