4.3 The Market System as an Efficient Mechanism for Information Flashcards
How do consumers react to a change in price?
according to taste, personal preferences, and budget set
How do profit seeking producers react to the a change in price?
The impact on its expected profits.
The existing levels of prices, wages, and rates of retruns can be explained using _____
Demand and Supply Model
What causes a movement along the demand curve?
changes in interest rate
What causes a shift in the demand curve?
A change in anything else (nonprice variable) that affects demand for financial capital would shift the demand curve.
What is the affect price controls on the economy?
Make it more difficult to analyze producer and consumer behavior
-Price controls with deprive everyone in the economy of vital information to adequately react to changes in the economy.
How is the rate of return measured?
the money flowing between those who supply or demand financial capital
How is priced measured in labor market analysis?
by annual or hourly salary recieved
How does price control affect resources?
By hiding information about the true scarcity of products causing misallocation of resources.
