Supply, Demand, and Government Policies

These flashcards cover key concepts related to supply, demand, government policies, price controls, tax incidence, and economic effects discussed in the lecture.

Price Ceiling

A legal maximum on the price at which a good can be sold.

Price Floor

A legal minimum on the price at which a good can be sold.

Binding Price Ceiling

A price ceiling set below the equilibrium price, causing a shortage.

Non-Binding Price Ceiling

A price ceiling set above the equilibrium price, having no effect on the market.

Tax Incidence

The manner in which the burden of a tax is shared among participants in a market.

Market Shortage

When demand exceeds supply at a given price.

Market Surplus

When supply exceeds demand at a given price.

Rent Control

Local ordinances that limit rent increases to help tenants afford housing.

Minimum Wage

The lowest legal salary that can be paid to workers.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in price.

Elasticity of Supply

A measure of how much the quantity supplied of a good responds to a change in price.

Secondary Market

A market where a good or service is resold after its initial purchase, often at a higher price due to scarcity.

Queuing

A mechanism that replaces financial cost with a time cost, such as waiting in line.

Housing Turnover Rate

The rate at which tenants move in and out of rental properties.

Housing Filtering

The process by which new, expensive housing is occupied by higher-income renters, making previous housing available to lower-income renters.

Earned Income Tax Credit (EITC)

A subsidy for earned income aimed at assisting low-income working individuals and families.

Wedge Effect of Tax

The difference between the price paid by buyers and the price received by sellers due to the tax.

Legally Binding Tax

A tax that enforces a specific minimum price or maximum price in a market.

Government Intervention

Regulatory actions taken by the government to affect economic outcomes.

Scarcity

The state of being in short supply; a situation where demand exceeds supply.

Supply and Demand Balance

The state in which the amount supplied equals the amount demanded.

Lobying

The act of attempting to influence decisions made by officials in government, often by interest groups.