Term
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Definition
| legal restrictions on how high or low a market price may o. They can take two forms: a price ceiling or a price floor |
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Term
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Definition
| a maximum price that sellers are allowed to charge for a good |
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Term
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Definition
| a minimum price buyers are required to pay for a good |
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Term
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Definition
| a market or an economy is inefficient if there are missed opportunities; some people could be made better off without making other people worse off |
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Term
| inefficient allocation to consumers |
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Definition
| people who want the good badly and are willing to pay a high price don't get it, and those who care relatively little about the good and are only willing to pay a low price do get it |
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Term
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Definition
| people spend money and expend effort |
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Term
| inefficiently low quality |
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Definition
| sellers offer low-quality goods at a low price even though buyers would prefer a higher quality at a higher price |
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Term
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Definition
| a market in which goods or services are bought and sold illegally- either because it is illegal to sell them at all or because the prices charged are legally prohibited by a price ceiling |
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Term
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Definition
| a legal floor on the wage rate, which is the market price of labor |
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Term
| inefficient allocation of sales among sellers |
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Definition
| those who would be willing to sell the good at the lowest price are not always those who actually manage to sell it |
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Term
| inefficiently high quality |
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Definition
| sellers offer high-quality goods at a high price, even though buyers would prefer a lower quality at a lower price |
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Term
quantity control aka quota |
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Definition
| an upper limit on the quantity of some good that can be bought or sold |
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Term
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Definition
| the total amount of a god that can be legally transacted |
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Term
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Definition
| gives its owner the right to supply a good |
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Term
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Definition
| the demand price of a given quantity is the price at which consumers will demand that quantity |
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Term
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Definition
| the supply price of a given quantity is the price at which producers will supply that quantity |
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Term
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Definition
| the price paid by buyers ends up being higher than that received by sellers. A quota drives a wedge between the demand price and the supply price of a good |
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Term
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Definition
| the earnings that accrue to the license-holder from ownership of the right to sell the good. It is equal to the market price of the license when the licenses are traded |
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Term
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Definition
| a tax on the sales of a good or service |
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Term
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Definition
| the incidence of a tax is a measure of who really pays it |
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Term
excess burden aka deadweight loss |
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Definition
| the excess burden, or deadweight loss, from a tax is the extra cost in the form of inefficiency that results because the tax discourages mutually beneficial transactions |
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