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Economics Ch. 6
Prentis Hall Economics New Ulm
| Question | Answer |
|---|---|
| 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. |
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gcowing
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