4.6 KEY TERMS

Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.

  1. Wasted resources
    Price controls
    Quota limit
    Inefficiently high quality
    Black markets
    Inefficient allocation to consumers
    Quota
    Price floor
    Quota rent
    Inefficiently low quality
    Minimum wage
    Licence
    Wedge
    Price ceiling
    Demand price
    Inefficient allocation of sales among sellers
    Quantity control
    Supply price
    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.
    the maximum price sellers are allowed to charge for a good or service; a form of price control.
    a form of inefficiency in which sellers who would be willing to sell a good at the lowest price are not always those who actually manage to sell it; often the result of a price floor.
    a legal floor on the wage rate. The wage rate is the market price of labour.
    the minimum price buyers are required to pay for a good or service; a form of price control.
    an upper limit, set by the government, on the quantity of some good that can be bought or sold; also referred to as a quantity control.
    a form of inefficiency in which sellers offer high-quality goods at a high price even though buyers would prefer a lower quality at a lower price; often the result of a price floor.
    the right, conferred by the government or an owner, to supply a good.
    the price of a given quantity at which producers will supply that quantity.
    a form of inefficiency in which people who badly want a good 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; often a result of a price ceiling.
    legal restrictions on how high or low a market price may go.
    the difference between the demand price of the quantity transacted and the supply price of the quantity transacted for a good when the supply of the good is legally restricted. Often created by a quantity control, or quota.
    the price of a given quantity at which consumers will demand that quantity.
    a form of inefficiency in which sellers offer low-quality goods at a low price even though buyers would prefer a higher quality at a higher price; often a result of a price ceiling.
    a form of inefficiency in which people expend money, effort, and time to cope with the shortages caused by a price ceiling.
    an upper limit, set by the government, on the quantity of some good that can be bought or sold; also referred to as a quota.
    the total amount of a good under a quota or quantity control that can be legally transacted.
    the difference between the demand price and the supply price at the quota limit; this difference, the earnings that accrue to the licence holder, is equal to the market price of the licence when the licence is traded.
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