Price System Economics


Terms in this set (...)

price system
a price system is a component of any economic system that uses prices expressed in any form of money for the valuation and distribution of goods and services and the factors of production.
Information has special characteristics: It is easy to create but hard to trust. It is easy to spread but hard to control.
An incentive is something that motivates an individual to perform an action.
When an economy is economically efficient, any changes made to assist one person would harm another.
refers to the speed with which labour markets adapt to fluctuations and changes in society, the economy or production.
An externality is a consequence of an economic activity that is experienced by unrelated third parties. An externality can be either positive or negative.
negative externality
A negative externality is a cost that is suffered by a third party as a result of an economic transaction
positive externality
This occurs when the consumption or production of a good causes a benefit to a third party.
public goods
A public good is a product that one individual can consume without reducing its availability to another individual and from which no one is excluded.
instability refers to a community or nation experiencing financial struggles due to inflation, consumer confidence issues, unemployment rates,
Equilibrium is the state in which market supply and demand balance each other and, as a result, prices become stable
A Market Shortage occurs when there is excess demand- that is quantity demanded is greater than quantity supplied.
A surplus is the amount of an asset or resource that exceeds the portion that is utilized.
price ceiling
is a situation when the price charged is more than or less than the equilibrium price determined by market forces of demand and supply.
rent control
Rent control acts as a price ceiling by preventing rents either from being charged above a certain level or from increasing at a rate higher than a predetermined percentage.
price floor
is a situation when the price charged is more than or less than the equilibrium price determined by market forces of demand and supply.
minimum wage
A minimum wage is the lowest remuneration that employers may legally pay to workers.
Inventory is the raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.
A desirable trend characterized with lots of enthusiasm and energy over a short period of time. ..
supply shock
A supply shock is an unexpected event that changes the supply of a product or commodity, resulting in a sudden change in its price.
efers to an artificial control on the distribution of scarce resources, food items, industrial production, etc.
black market
transactions usually occur "under the table" to let participants avoid government price controls or taxes.