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.