Chapter 4: Applications of Demand and Supply- Sole proprietorship- situation in which one individual owns a firm- Partnership- situation in which several individuals own a firm- Corporation-situation in which shareholders own stock in a firm- Corporate stocks- shares in the ownership of a corporation- Stock market- set of institutions in which shares of stock are bought and sold- Retained earnings- profits not paid out in dividends- Dividends- profits distributed to shareholders- Price floor- minimum allowable price set above the equilibrium priceo Meant to protect the seller. Creates a surplus - The purpose of rent control is to make rental units cheaper for tenants than they would otherwise be- Rent control is an example of a price cilingo Price ceiling- maximum allowable price set below the equilibrium price Established when the govt feels when the equilibrium market price is too high for buyers. Creates a shortage- There has been much discussion over the past three decades about the health-care problem in the United States- Much of this discussion has focused on rising spending for health care- To assess the market forces affecting health care, we will focus first on just one of these markets: the market for physician office visits- Third party payer- agent other than the seller or the buyer who pays part of the price of a good or service- Consumers use more than they would in the absence of third party payerso Providers are encourage to supply more than they otherwise would- The result is increased total
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