Equilibrium - market price, causing a shortage. Price Floor...

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Equilibrium Terms arket Economy - An economy in which the prices and distribution of goods and services are determined by the interaction of large numbers of buyers and sellers, none of whom have significant individual impact on prices or quantities. Market Equilibrium - Point at which quantity supplied and quantity demanded are equal, and prices are market-clearing prices, leaving no surplus or shortage. Market-Clearing Price - The price of a good or service at which quantity supplied is equal to quantity demanded. Also called the equilibrium price. Monopoly - A firm that is the only seller of a good, with no competition. Natural Monopoly - A monopoly that exists because, for that specific good, the average cost curve is downward-sloping, making it difficult for new firms to enter the market. Optimization - To maximize utility by making the most effective use of available resources, whether they be money, goods, or other factors. Price Ceiling - Maximum price set by the government on a specific good. Usually is set below
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Unformatted text preview: market price, causing a shortage. Price Floor - Minimum price set by the government on a specific good. Usually is set above market price, causing a surplus. Price-taker - Concept that in a competitive market, buyers and sellers cannot decide what price they will accept, since they have no significant influence on the much larger market. Instead, they have to accept the market price and make their decisions accordingly. Profit - Actual amount that a firm makes from selling a good. It is equal to Total Revenue (TR) - Total Cost (TC). Seller - Someone who sells goods and services to a buyer for money. Shortage - Situation in which the quantity demanded exceeds the quantity supplied for a good or service; price is below equilibrium price. Short Run - The immediate future, for which buyers and sellers make "temporary" decisions, such as shutting down production or increasing consumption, for the time being....
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This note was uploaded on 02/09/2012 for the course ECO ECO2013 taught by Professor Jominy during the Fall '08 term at Broward College.

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