Econ. Chapter 6 Vocabulary

Market equilibrium

The very interaction of demand and supply drives prices to a point called ________. At this point, 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

The price marked by the equilibrium point on a supply and demand graph is known as the ________. Supply and demand are in balance. Quantity of a product demanded by consumers equals the quantity supplied by producers.

Market-clearing price

This price is also known as the ________ because at this price, the market will be "cleared" of surpluses and shortages.

Equilibrium quantity

The quantity marked by the equilibrium point on the same graph is called the _________. The amount of a good or service supplied by producers balances the quantity demanded by consumers.

Market price

_________ is the price a willing consumer pays to a willing producer for the sale of a good or service.

Disequilibrium

Sometimes, however, producers set a market price that is above or below the equilibrium price. Economists refer to this state of affairs as ________. When this occurs in a market, the quantity demanded is no longer equal to the quantity supplied. The result is either a shortage or a surplus.

Excess demand

Economists call situations like these--in which the quantity demanded at a specific price exceeds the quantity supplied--________. Consumers experience this as a shortage.

Excess supply

The result was ________, a situation in which the quantity supplied at a specific price exceeds the quantity demanded. Producers experience this as a surplus.

Price controls

On occasion, however, governments intervene in the market in an attempt to influence prices . They do this by placing limits on how high or low certain prices may be. These limits are called ________.

Price floor

A _________ is a minimum price consumers are required to pay for a good or service. Made to prevent prices from going too low.

Minimum wage

The ________ is a government-imposed legal floor on the hourly wage rate, which is the price the market pays for labor.

Price ceiling

A _________ is a maximum price consumers may be required to pay for a good or service. Prevents prices from going too high.

Rent control

_________ regulations make it illegal to charge more than a specified monthly amount for rental housing.

Rationing

________ is the controlled distribution of a limited supply of a good or service.

Black market

A _________ is an illegal market in which goods are traded at prices or in quantities higher than those set by law.