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Econ Chapter 6
Prices and Decision Making
Term | Definition |
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Money | monetary value of a product as established by supply and demand |
Rationing | system of allocating goods and services without prices (gov decides ppl’s “fair share”) |
Ration Coupon | permit allowing holder to receive a given amount of a rationed product |
Rebate | partial refund of a product’s original price |
Economic Model | a simplified version of a complex behavior expressed in the form of an equation, graph, or illustration |
Equilibrium Price | price where quantity supplied equals quantity demanded |
Surplus | situation where quantity supplied is greater than quantity demanded at a given price |
Shortage | situation where quantity supplied is less than quantity demanded at a given price |
Price Ceiling | highest legal price that can be charged for a product |
Minimum Wage | lowest legal wage that can be paid to most workers |
Price Floor | lowest legal price that can be paid for a product |
Target Price | price floor for agricultural products set by the government to stabilize farm income |
Nonrecourse Loan | agricultural loans that carries no penalty or further obligation if it is not repaid |
Deficiency Payment | cash payment making up the difference between market price and target price |