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PCS Economics
Economics Vocabulary Chapter 6
| Term | Definition |
|---|---|
| market equilibrium | at this point of equilibrium, the quantity of a good or service that consumers are willing and able to buy equals the quantity that producers are willing and able to sell |
| equilibrium price | at this price, supply and demand are in balance (also known as market-clearing price) |
| equilibrium quantity | at this quantity, the amount of a good or service supplied by producers balances the quantity demanded by consumers |
| market price | price a willing consumer pays to a willing producer for the sale of a good or service |
| disequilibrium | a situation that exists when the quantity of a product demanded by consumers doe not equal the quantity supplied, resulting in a shortage or a surplus |
| excess demand | a situation that exists when the quantity demanded of a product exceeds the quantity supplied, thus producing a shortage |
| excess supply | a situation that exists when the quantity supplied of a product exceeds the quantity demanded, thus producing a surplus |
| price controls | government imposed limits on the prices that producers may charge in the market |
| price floor | a minimum price set by the government to prevent prices form going too low |
| minimum wage | the lowest hourly rate, or wage, that employers can legally pay their employees; a price floor on wages |
| price ceiling | a maximum price set by the government to prevent prices from going to high |
| rent control | a legal limit on the amount a landlord can charge a tenant; a price ceiling on rents |
| rationing | the controlled distribution of a limited supply of a good or service |
| black market | an illegal market in which goods are traded at prices or in quantities higher than those set by law |
| market structure | the organization of a market, based mainly on the degree of competition; there are four basic market structures: perfect competition, monopolistic competition, oligopoly, and monopoly |
| market power | the ability of producers to influence prices |
| perfect competition | a market structure in which many producers supply an identical product and no single producer can influence its price; in such a market, prices are set by supply and demand |
| commodity | a product that is exactly the same no mater who produces it (example: milk, corn, wheat) |
| price taker | a producer that has no influence over the price of a product; price takers must accept the market price |
| transaction costs | the time and money consumers spend shopping for the best product at the best price |
| barriers to entry | an obstacle that can restrict a producer's access to a market and limit competition (examples: start up costs, don't have needed supplies - if you don't have gold, then you can't go into gold business) |
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Ms.Sala
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