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Economics Ch. 6

Prentis Hall Economics New Ulm

QuestionAnswer
Rationing is a common form of distribution in a centrally-planned economy.
In a free market, if the minimum wage is set below the market equilibrium wage rate, it will have no effect on employment.
When does a surplus exist? when there is a greater supply of a good than people want or are able to buy
Driving to different stores to locate a product is an example of a search cost.
Disequilibrium occurs when quantity supplied and quantity demanded are not equal.
When there is excess supply, prices tend to fall.
When the actual price in a market is below the equilibrium price, you have a price ceiling.
The minimum wage is an example of a price floor.
If the market equilibrium wage for low-skilled labor is $4.50 per hour, and the minimum wage is set at $5.15, the result is an excess supply of labor.
Whenever the market is in disequilibrium and prices are flexible, market forces will push the market toward equilibrium.
Which of the following does NOT apply to a market system? It ensures that government intervention is always present.
Which of the following is an example of spillover costs? People have to pay higher prices for items that are in short supply.
Which statement explains why prices rise in a market? There is excess demand in the market.
A market is in equilibrium when quantity supplied and quantity demanded are equal.
In any market, quantities supplied and quantities demanded will be equal at only one price and quantity.
In a ____________, one organization decides the goods to be produced and sets the prices that can be charged. command economy
How are goods and resources distributed in a free market economy? through prices
Which of the following is NOT an advantage of a price-based system? prices can easily be set by the government
Which of the following is an example of a shortage? Consumers cannot find enough of a popular new toy in stores.
In a rationing system, offering a landlord extra cash to guarantee the availability of an apartment is considered to be doing business on the black market.
A minimum price for a good or a service is a price floor.
A maximum price that can be legally charged for a good or service is a price ceiling.
If automobile workers went on strike causing a decreased supply of cars, the supply curve would shift inward to the left, and there would be an eventual upward movement along the demand curve, reestablishing equilibrium.
During a housing crisis in the early 1940s, which of the following was used by some local governments to prevent inflation? price ceilings. Rent control, a type of price ceiling, was imposed to curb inflation in New York City during a housing crisis in the early 1940s.
Disequilibrium describes any price or quantity not at equilibrium; when quantity supplied is not equal to quantity demanded in a market.
An increase in demand is represented by a(n) shift to the right of the demand curve.
Surplus is a situation in which quantity supplied is greater than quantity demanded.
Search costs are the financial and opportunity costs consumers pay when looking for a good or service.
A price ceiling placed on the monthly cost of renting a house or apartment is a(n) rent control. Rent control may benefit those individuals who have the privilege of living in a rent-controlled apartment. However, there are other individuals who might be without housing because the rent control can cause a shortage in rental units.
Created by: gcowing
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