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Chapter 6 (Extensions of Demand, Supply, and Elasticity)
Terms in this set (17)
An economic system in which relative prices are constantly changing to reflect changes in supply and demand for different commodities.
Acts of trading between individuals that make both parties to the trade subjectively better off.
Terms of Exchange
The prices we pay for the desired items.
The costs associated with finding out exactly what is being exchanged as well as the cost of enforcing contracts.
Government-mandated minimum or maximum prices that may be charged for goods and services.
The maximum price that may be allowed in an exchange.
A minimum price below which a good or service may not be sold.
The placement of a price ceiling or maximum price on rents.
Methods used to ration scarce goods that are price controlled.
A market in which the price-controlled good is sold at an illegally high price through various under-the-table methods.
The lowest hourly wage rate that firms may legally pay their workers.
Price Support Policies
Policies that aim to help the farmers by enhancing the prices they receive for the farm products they supply.
A price floor policy reinforced by the purchase of surplus output by the government.
Policy that allows producers to band together to restrict total quantity supplied by using quotas.
A supply restriction that prohibits the importation of more than a specified quantity of a particular good in a one-year period.
A tax imposed on a particular commodity or service.
The division of the burden of a tax between the buyer and the seller.