Ch+6.3

Ch 6.3 notes __Prices in the free market__ __Advantage of prices__ __A wide choice of goods__ __Prices and the profit incentive__
 * Prices serve a vital role in a free market economy
 * prices help move labor land and capital
 * supply shock is a sudden shortage of a good such as gasoline or wheat
 * creates a problem of excess demand because suppliers can no longer meet the needs of consumers
 * rationing is the dividing up goods and services using criteria other than price is expensive and take a long time to organize
 * Black market allows consumers to pay more so they can buy a good when rationing makes it otherwise unavailable
 * black markets are a nearly inevitable consequences of rationing such trade is illegal and strongly discourage by government
 * spillover costs are also known externalities include cost of production such as air and water pollution that spill over onto people who have no control over how much of a good is produced