Econ 208 Midterm 1
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15 Terms
Price of Inputs
All things that a firm uses to make its products, such as materials, labor and machines.
Technology innovations shift supply curves, which way?
To the right
The excise tax shifts supply curves to the?
To the left.
A change in supply
infers a shift in the supply curve from the left or right
change in quantity supplied
infers a change from one point to another on the same supply curve
excess demand
A situation in which, at the given price quantity demanded exceeds quantity supplied.
excess supply
A situation in which, at the given price quantity supplied exceeds quantity demanded.
equilibrium price/ market-clearing price
The price at which the quantity demanded equals the quantity supplied is called the equilibrium price, or the market-clearing price.
equilibrium
(DIFFERENT FROM EQUILIBRIUM PRICE(
Absolute Price
The amount of money that must be spent to acquire one unit of a product (i.e money price)
Relative Price
The ratio of the money price of one product to the money price of another product; that is, a ratio of two absolute prices.
Binding - Price ceilings lead to
Excess demand
Binding price floors lead to…
excess supply
Price Ceiling
legal max on how high the price of a product can be
Price Floor
Legal Minimum of what the price of product can be.