M4 Flashcards
at certain price, quantity demanded and quantity supplied are equal.
Market Equilibrium
price at which quantity demanded and quantity supplied are equal.
Equilibrium Price
more quantity supplied than demanded
Market surplus may have surplus
more quantity demanded than supplied.
Market may have shortage
imbalance between quantity demanded and quantity supplied.
Disequilibrium
selling products at lower prices than others.
Competitive Pricing
CHARACTERISTICS OF THE PRICE SYSTEM
✓ Neutral – interaction of consumers
✓ Market Driven – not central planners determine prices.
✓ Flexible – shortages lead producers to change prices.
✓ Efficient – maximum number of products sold.
legal maximum price a seller may change for a product.
Price Ceiling
legal minimum price buyers may pay for product.
Price Floor
least amount employer may pay for one hour of work.
Minimum Wage
way of allocating products
Rationing
illegal buying and selling of products
Black Market
