Economics, Chapter 6, Price Equilibrium – Flashcards
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a situation in which the quantity demanded of a good or service at a particular price is equal to the quantity supplied at that price
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market equilibrium
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the price at which the quantity of a product demanded by consumers and the quantity supplied by producers are equal
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equilibrium price
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the result of quantity supplied being greater than quantity demanded, usually because prices are to high
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surplus
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the result of quantity demanded being greater than quantity supplied, usually because prices are to low
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shortage
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when there is an imbalance between quantity demand and quantity supplied
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disequilibrium
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occurs when producers sell goods and services at prices that best balance the twin desires of making the highest profit and luring customers away from rival producers
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competitive pricing
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a way to encourage people to take a certain action
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incentive
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an established maximum price that sellers may charge for a good or service
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price ceiling
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an established minimum price that buyers must pay for a good or service
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price floor
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the minimum legal price that an employer may pay a worker for one hour of work
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minimum wage
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a system in which the government allocates goods and services using factors other than price
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rationing
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goods and services are illegally bought and sold in violation of price controls or rationing
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black market
