Applied Economics Exam

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

• Shortage

• Transaction Costs

• Role of Prices

• Market Costs

A minimum legal price below which a product cannot sold.

• Transaction Costs

• Price Cieling

• Supply

• Price Floor

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

• shortage

• supply

• Market

• demand

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

• Consumer Surplus

• Price Floor

• Absolut Advantage

• Price Ceiling

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

• Surplus

• Market Equilibrium

• Invisible Hand

• Market exchange

It plays an important role in facilitating exchange.

• Money

• Barter

• selling

• Division of Labor

Occurs when individual workers focus on single tasks, enabling each worker to become more efficient and productive

• Absolute Advantage

• Specialization

• Consumer Surplus

• Exchange

A system of exchange in which products are traded directly for other products.

• Barter

• selling

• Price Ceiling

• Money

Organizes the production process so that each worker specializes in a separate task.

• Productivity

• Law of Comparative Advantage

• Division of Labor

• Absolute Advantage

The ability to make something using fewer resources than other producers require.

• Absolute Advantage

• Law of Comparative Advantage

• Specialization

• Productive Efficiency