Chapter 4 - Demand and Supply Applications

Question 1

price ceiling

Answer 1

A maximum price that sellers may charge for a good, usually set by government.

Question 2

queuing

Answer 2

Waiting in line as a means of distributing goods and services: a nonprice rationing mechanism.

Question 3

favored customers

Answer 3

Those who receive special treatment from dealers during situations of excess demand.

Question 4

ration coupons

Answer 4

Tickets or coupons that entitle individuals to purchase a certain amount of a given product per month.

Question 5

black market

Answer 5

A market in which illegal trading takes place at market-determined prices.

Question 6

price floor

Answer 6

A minimum price below which exchange is not

permitted.

Question 7

minimum wage

Answer 7

A price floor set for the price of labor.

Question 8

consumer surplus

Answer 8

The difference between the maximum amount a person is willing to pay for a good and its current market price.

Question 9

producer surplus

Answer 9

The difference between the current market price and the full cost of production for the firm.

Question 10

deadweight loss

Answer 10

The total loss of producer and consumer surplus from underproduction or overproduction.