eco gov chapter 5-7

cartel

A formal organization that coordinates prices and production

subsidy

A government payment that supports a business or market

monopoly

market in which a single seller dominates

monopsony

A market situation where there is only one buyer

Olgipoly

A market structure in which a few large firms dominate a market

price war

A series of competitive price cuts that lowers the market below the cost of production

supply shock

A sudden shortage of a good

collusion

An agreement among firms to divide the market; set prices or limit production

demand shock

An event that suddenly increases or decreases the amount of available goods

marginal benfit

An increase in price of producing one more unit of a good

Law of Demand

Economic point that states consumers buy more goods at a lower price

complement

Goods that are bought and used together

land, labor, capital factors of production

Groups of resources that are used to make all goods and services

minimum wage

.Lowest amount an employer can pay an employee

price ceiling

Maximum price that can be charged for a good or service

revenue

The amount of money a company receives from selling goods

Rationing

The controlled distribution of a scarce resource or service

price floor

The minimum price for a good or service

Equilibrium price and quality

The point of balance between price and quantity

Law of Supply

The tendency of manufacturers to offer more goods at a higher price

subsititution effect

When a price of a good increases, a consumer may purchase less and purchase other goods

Elacticity

When demand is relatively unresponsive to price or availability

excess demand

When quantity demanded is greater than quantity supplied

surplus

.When quantity supplied is greater than quantity demanded

black market

Where goods and services are sold illegally