Market Equilibrium for Demand and Supply Flashcards Preview

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Flashcards in Market Equilibrium for Demand and Supply Deck (11)
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1

price ceiling

maximum price for a good set by government

2

How does a price ceiling affect market equilibrium?

maximum price set above equilibrium price has no effect maximum price set below equilibrium creates shortage

3

price floor

minimum price for a good set by government

4

How does a price floor affect market equilibrium?

minimum price set above equilibrium price creates surplus minimum price set below equilibrium price has no effect

5

What are maximum prices generally placed on?

goods considered to be necessities

6

maximum price deadweight welfare loss

C + E

7

maximum price black market price

P1

8

maximum price illegal black market profit

B + D

9

maximum price post-black market consumer surplus

A

14

what are minimum prices a trade off between?

market efficiency and desireable socio-political policies

15

what is the supply curve for a fixed quantity of a good?

vertical (perfect inelasticity of supply) momentary supply curve