Economics Chapter 6 Key Terms

When the quantity consumers are willing and able to buy equals the quantity producers are willing and able to sell.

At a given price, the amount by which quantity supplied exceeds quantity demanded, a surplus usually forces the price down.

At a given price, the amount by which quantity demanded exceeds quantity supplied; a shortage usually forces the price up.

The costs of time and information needed to carry out market exchange.

Consumers are willing and able to buy more of the product at each price.

Consumers are willing and able to buy less of the product at each price.

Producers are willing and able to sell more of the product at each price.

Producers are willing and able to sell less of the product at each price.

Occurs when a firm produces at the lowest possible cost per unit.

Occurs when a firm produces the output most valued by consumers.

A mismatch between quantity demanded and quantity supplied as the market seeks equilibrium, usually temporary, except when government intervenes to set the price.

A minimum legal price below which a product cannot be sold.

A maximum legal selling price above which a product cannot be sold.

The difference between the most that consumers are willing and able to pay for a given quantity of a good and what they actually pay.

An approach that borrows insights from psychology to help explain economic choices.

There are limits to the amount of information people can comprehend and act on.

Limited self-discipline in following through with decisions that are in one's self-interest, especially one's long-term interest.

The mapping of brain activity while subjects make economic choices to develop better models of economic decision making.