Demand, supply, and prices Flashcards
As buyers and sellers interact, the market moves toward ________
Market Equilibrium
________ is the price at which quantity demanded and the quantity supplied are equal
Equilibrium price
The vertical axis shows what?
Prices
the horizontal axis shows the what?
Quantity demanded and Quantity Supplied
_____ is the result of QS being greater than QD
Surplus
_______ is the result of QD being greater than QS
shortage
When there is a shortage, producers do what to prices?
raise
when there is a surplus, producers do what to prices?
lower
six factors of Demand
Income, market size, consumer tastes, consumer expectations, substitute goods, and complementary goods
Six factors of Supply
Input cost, Labor productivity, technology, government actions, producer expectations, and number of producers
A decrease in demand moves the graph to the _______
left
when you increase you moves the graph to the________
right
Demand is _________
Direct
Supply is________
Inverse
A _______ is the legal maximum price that sellers may charge for a product
price ceiling
A _________ is a legal minimum price that buyers must pay for a product
price floor
The _________ is a legal minimum amount that an employer must pay for one hour of work
minimum wage
________ is a system in which the government allocates goods and services using factors other than price
rationing
A _______ involves illegal buying or selling in violation of price controls or rationing
black market
A ______occurs below equilibrium
binding price ceiling
A ________occurs above equilibrium
binding price floor
__________ occurs when producers sell goods and services at prices that best balance the twin desires of making the highest profit and luring consumers away from rival producers
competitive pricing
four characteristics of the price system
its neutral, its market driven, its flexible, its efficient
An _________ encourages people to act in certain ways
incentives
for producers, the price system has two great advantages:
Information and Motivation
_______ act as signals and incentives to consumers
prices
________ rely on the consumer perception that a certain logo is worth a higher price
brand marketers
