| A | B |
|---|
| Set of assumptions used to describe or predict behavior | economic model |
| the maximum legal price that can be charged. | price ceiling |
| the allocation of limited supplies as in wartime | rationing |
| quanitity supplied is greater than the quantity demanded at a given price | surplus |
| floor prices for farm products | target price |
| the lowest leagal price that can be paid for a good or service | price floor |
| the price that "clears the market" | equilibrium price |
| makes up the difference between market price and target price. | deficiency payment |
| prices a relatively stable and quantity supplied is equal to quantity demanded. | market equilibrium |
| ticket enabling the holder to purchase a product | ration coupon |
| In a free market, prices are usually the result of | competition |
| Prices serve as al link between producers and | consumers |
| Because prices do not favor producers or consumers, they are described as | neutral |
| A market economy adjusts to unexpected events by | adjusting consumption and production. |
| In a market economy, a high price is a signal for | producers to supply more and consumers to buy less |
| An advantage of a free market is | that the market finds its own equilibrium |
| A characteristic of rationing is that | it has a negative impact on people's incentive to work and produce. |
| Price flexibility works to resolve the problems of | surpluses and shortages |
| The CCC is a federal agency created to assist | farmers |
| If a competitive market is at equilibrium, and if there is a sudden increase in demand, then | a temporary shortage will occur and the price will rise. |
| An electronics retail store offers a color television to customers below the store's cost. This is an example of | a loss leader |
| Relatively small changes in supply (both increases and decreases) will have the smallest impact on price when | demand is elastic |
| To increase car sales, manufacturers might return part of the original payment to the buyer. | rebate |
| Markets are said to "talk" when | prices move up or down significantly. |
| Government planners allocating resources and products is an example of a | command economy |
| The advantages of prices | they are neutral, flexible, create a freedom of choice, no daminstrative cost, and efficient |
| Problems of rationing | people feel they do not get their fair share, high adminstrative cost, diminished incentives |
| a set of assumptions that can be listed in a table to help analyze behavior and predict outcome | economic model |
| a situation in which the quantity deanded is greater than the quantity supplied at a given priice | shortage |
| Two means of prices being fixed | price ceiling and price floor |
