Chapter 6: Markets, Equilibrium, and Prices
price ceiling
A legal maximum on the price at which a good can be sold
price floor
A legal minimum on the price at which a good can be sold
rationing
A limited portion or allowance of food or goods; limitation of use
minimum wage
A minimum price that an employer can pay a worker for an hour of labor
market equilibrium
A situation in which quantity demanded equals quantity supplied
price controls
System of pricing determined by the government
market price
The point where supply and demand are equal
equilibrium price
The price at which the amount of goods producers supply meets the amount of goods consumers demand.
equilibrium quantity
The quantity supplied and the quantity demanded at the equilibrium price
varies becuase time it takes for producers to change prices to matchsonsumer demands varies
Why does the time it takes to reach equilibrium vary from market to market?
Gov. might use rationing if there was a decrease in supply like a natural disaster and the result would be the increase in price and that could result to the use of the black market
Why might a government use rationing and what would some of the effects be?
rent control
a price ceiling placed on rent
black market
an illegal market in which goods or currencies are bought and sold in violation of rationing or controls
disequilibrium
describes any price or quantity not at equilibrium; when quantity supplied is not equal to quantity demanded in a market
excess demand
when quantity demanded is more than quantity supplied, shortage
excess supply
when quantity supplied is more than quantity demanded, Surplus