Economics Chapter 6 Key Terms

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Author:
playher
ID:
205110
Filename:
Economics Chapter 6 Key Terms
Updated:
2013-03-05 09:40:29
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demand supply
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Key terms for supply and demand.
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  1. market equilbrium
    When the quantity consumers are willing and able to buy equals the quantity producers are willing and able to sell.
  2. surplus
    At a given price, the amount by which quantity supplied exceeds quantity demanded, a surplus usually forces the price down.
  3. shortage
    At a given price, the amount by which quantity demanded exceeds quantity supplied; a shortage usually forces the price up.
  4. transaction costs
    The costs of time and information needed to carry out market exchange.
  5. increase in demand
    Consumers are willing and able to buy more of the product at each price.
  6. decrease in demand
    Consumers are willing and able to buy less of the product at each price.
  7. increase in supply
    Producers are willing and able to sell more of the product at each price.
  8. decrease in supply
    Producers are willing and able to sell less of the product at each price.
  9. productive efficiency
    Occurs when a firm produces at the lowest possible cost per unit.
  10. allocative effieciency
    Occurs when a firm produces the output most valued by consumers.
  11. disequilibrium
    A mismatch between quantity demanded and quantity supplied as the market seeks equilibrium, usually temporary, except when government intervenes to set the price.
  12. price floor
    A minimum legal price below which a product cannot be sold.
  13. price ceiling
    A maximum legal selling price above which a product cannot be sold.
  14. consumer surplus
    The difference between the most that consumers are willing and able to pay for a given quantity of a good and what they actually pay.
  15. behavioral economics
    An approach that borrows insights from psychology to help explain economic choices.
  16. bounded rationality
    There are limits to the amount of information people can comprehend and act on.
  17. limited willpower
    Limited self-discipline in following through with decisions that are in one's self-interest, especially one's long-term interest.
  18. neuroeconomics
    The mapping of brain activity while subjects make economic choices to develop better models of economic decision making.

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