Supply, Demand, 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
is the result of quantity supplied being greater than quantity demanded.
Surplus
When there is a surplus, producers ____ prices in an attempt to balance quantity supplied and quantity demanded.
lower
is the result of quantity demanded being greater than quantity supplied.
Shortage
When there is a shortage, producers in an attempt to balance quantity supplied and quantity demanded.
raise prices
What six factors causes a shift in demand?
Income, market size, consumer tastes, consumer expectations, substitute goods, and complementary goods.
What six factors causes a shift in supply?
Input costs, labor productivity, technology, gov. Actions, producer expectations, and number of producers.
If demand increases or supply decreases, the Equilibrium price
rises
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
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
