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
an upper limit, set by the government, on the quantity of some good that can be bought or sold
quantity control (quota)
the earnings that accrue to the license-holder from ownership of the right to sell the good
quota rent
the insufficiency of a product that occurs when the quantity demanded exceeds the quantity supplied; occurs when the price is below the equilibrium price
shortage
the price of a given quantity at which producers will supply that quantity
supply price
the excess of a good or service that occurs when the quantity supplied exceeds the quantity demanded; occurs when price is above equilibrium price
surplus
a legal floor on the wage rate (market price of labor)
minimum wage
the change in the quantity of a good demanded as the consumer substitutes the good that has become relatively cheaper for the good that has become relatively more expensive
substitution effect
a form of inefficiency in which people expend money, effort, and time to cope with the shortages caused by a price ceiling
wasted resources
the difference between the demand price of the quantity transacted and the supply price of the quantity transacted for a good when the supply of the good is legally restricted; often created by a quota or tax
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