Quiz 3 terms Flashcards
losses associated with quantities of output that are greater than or less than the efficient level, as can result from market intervention such as taxes, or from externalities such as pollution
deadweight loss
the price of a given quantity at which consumers will demand that quantity
demand price
a market in which goods/services are bought/sold illegally, either because it is illegal to sell them at all or because the prices charged are legally prohibited by a price ceiling
black market
the quantity of a good/service bought/sold at the equilibrium price
equilibrium quantity
a form of inefficiency in which sellers offer low-quality goods at a low price even though buyers would prefer a higher quality at a higher price; often a result of a price ceiling
inefficiently low quality
a form of inefficiency in which people who want a good badly and are willing to pay a high price don’t get it and those who care relatively little about the good and are only willing to pay a low price do get it; often a result of a price ceiling
inefficient allocation to consumers
a form of inefficiency in which sellers who would be willing to sell at the lowest price are not always those who actually manage to sell it; often the result of a price floor
inefficient allocation of sales among sellers
a form of inefficiency in which sellers offer high-quality goods at a high price even though buyers would prefer a lower quality at lower price; often the result of a price floor
inefficiently high quality
the change in the quantity of a good consumed that results from the change in a consumer’s purchasing power due to the change in the price of the good
income effect
a technique for calculating the percent change in which changes in a variable are compared with the average, or midpoint, of the starting and final values
midpoint method
the maximum price sellers are allowed to charge for a product; a form of price control
price ceiling
the minimum price buyers are required to pay for a product; a form of price control
price floor
measures the responsiveness of the quantity to the price of that good; the ratio of the percent change in the quantity demanded to the percent change in the price as we move along the demand curve (dropping the minus sign)
price elasticity of demand
something that gives its owner the right to supply a product
license
legal restrictions of how high or low a market price may go
price controls
