Economics Ch. 6
What is the difference between a PRICE CEILING and a PRICE FLOOR?
A price ceiling is the maximum legal price that can be charged for a product. Rent controlled apartments are an example of a good that has a price ceiling. A price floor is the lowest legal price that can be paid for a good or service. State and federal minimum wage is an example of a price floor, so are agreements oftem made my labor unions.
What is a rebate?
A rebate is a partial refund on something paid for. It is like a coupon, except you get money back instead of a lowered price. You usually have to wait several weeks to receive a rebate payment.
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Indicate on these market demand and supply curves where you would find the EQUILIBRIUM PRICE, SHORTAGE, and SURPLUS.
What is rationing? Why is rationing sometimes done?
Rationing is when the government decides how much is each person's "fair share" of a product. Rationing is done when supplies are extremely low or are needed for other purposes. such as war.
What is the difference between surplus, shortage, and equilibrium price?
Surplus is when there is too much of a good, or leftovers. Surplus occurs when prices or quantities are too high. A shortage is when there is not enough of a good. Shortages occur when prices or quantities are too low. The equilibrium price is the price when the exact number of people buy a good as the amount of goods produced.
