Lesson 28 - unit 6 Flashcards
What are some ways that price is a factor in an economy?
- It influences supply and demand
- It determines who does what work and what work is done
- It determines who is able to have goods and services
- It effects consumer’s buying habits
- It is an efficient way to allocate scarce resources
- It determines market equilibrium
What is a price maker?
A producer who has enough influence in the market to have an impact on what price is charges for its good or service.
What is a price taker?
A producer who has little influence on the market by itself and is forced to charge the prevailing price for its good or service.
What is relative price?
The price of one good or service expressed as the price for another good or service
How has most of America’s wealth and economic strength come about?
by lowering prices for goods and services
What is price discrimination?
Selling the same good to different consumers at different prices.
What is a price ceiling? Give an example.
A maximum allowable price set by the government that is below the market clearing price. An example is rent control.
What is a price floor? Give an example.
A minimum allowable price set by law that is above the market clearing price. An example is the U.S. setting price floors for agricultural products.
John Davenport says that the market requires a framework of what?
Law, order, and ethical consensus that involves fundamentally an affirmation of certain human values.
What are the 2 basic ways to allocate resources that Davenport describes?
- An all-wise government which plans everything
- Consumers bid for what they want via price mechanism
Davenport says that “you do your thing and I’ll do mine” is really an invitation to what?
Anarchy or worse.
