Chapter 4: Demand and Supply Applications
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11 Terms
price rationing
The process by which the market system assigns goods and services to consumers when quantity demanded exceeds quantity supplied
price ceiling
A maximum price that sellers may charge for a good, usually set by the government
queuing
Waiting in line as a means of distributing goods and services: a nonprice rationing mechanism.
favored customers
Those who receive special treatment from dealers during situations of excess demand.
ration coupons
Tickets or coupons that entitle individuals to purchase a certain amount of a given product per month.
black market
A market in which illegal trading takes place at market-determined prices.
price floor
A minimum price below which exchange is not permitted.
minimum wage
A price floor set for the price of labor.
consumer surplus
The difference between the maximum amount a person is willing to pay for a good and its current market price
producer surplus
The difference between the current market price and the cost of production for the firm.
deadweight loss
The total loss of producer and consumer surplus from underproduction or overproduction.