Principles of Microeconomics: Supply, Demand, and Government Policies

These flashcards cover key terms and concepts related to supply, demand, price ceilings, and price floors, as discussed in Principles of Microeconomics.

Price Ceiling

A government regulation that places an upper limit on the price at which a particular good, service, or factor of production may be traded.

Rent Ceiling

A regulation that makes it illegal to charge more than a specified rent for housing.

Housing Shortage

A situation created when a rent ceiling is set below the equilibrium price, leading to a decrease in the quantity supplied and an increase in the quantity demanded.

Black Market

An illegal market that operates alongside a government-regulated market, often resulting from price ceilings.

Search Activity

The time spent looking for someone with whom to do business, often increased during shortages.

Price Floor

A government regulation that places a lower limit on the price at which a particular good, service, or factor of production may be traded.

Minimum Wage

A government regulation that makes hiring labor for less than a specified wage illegal.

Unemployment

A situation where individuals who are willing to work at a given wage cannot find employment, often a result of price floors like the minimum wage.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium outcome is not achievable or not achieved.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive.

Consumer Surplus

The difference between what consumers are willing to pay for a good versus what they actually pay.

Total Surplus

The sum of producer surplus and consumer surplus; an indicator of economic welfare.