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Econ 6
| Question | Answer |
|---|---|
| A demand schedule shows... | How much of a good consumers are willing to buy at various prices |
| A supply schedule shows... | How much firms are willing to sell at various prices |
| Equilibrium | The point of balance at which the quantity demanded equals the quantity supplied |
| How do you find equilibrium? | Look for the price at which the quantity supplied equals the quantity demanded |
| Disequilibrium | When quantity supplied is not equal to quantity demanded in a market |
| Two outcomes of disequilibrium | Shortage or surplus |
| Shortage | When quantity demanded is more than quantity supplied |
| If you are running a bakery and notice long lines of customers waiting to buy your goods what would you do? | Raise prices to earn more profit |
| What happens if the price is too high? | People buy less and a surplus exists |
| Surplus | When quantity supplied is more than quantity demanded |
| Price ceiling | Maximum price that can legally be charged for a good or service |
| Who sets price ceilings and rent control? | The government |
| Why are price ceiling and rent control set? | To prevent inflation of prices so those who are poor can have "essential" good or services that might ebecome too expensive. |
| Price floor | Minimum price for a good or service |
| Minimum wage | Minimum price that an employer can pay a worker for one hour of labor |
| Why does the government set price floors? | So sellers(laborers) receive at least a minimum reward for their efforts |
| What happens in the market if the minimum wage is set above the market equilibrium? | The demand for workers will go down |
| Which direction does the supply curve shift as manufacturers continue to offer greater supply of one good? | Right |
| Inventory | Quantity of goods that a firm has on hand |
| Which direction does a supply curve shift is there is a reduction in supply? | Left |
| Fad | Product that enjoys enormous popularity for a short time |
| Search costs | Financial and opportunity cost that consumers pay in search for a product or service |
| Price | A standard measure of value |
| Supply shock | Sudden shortage of a good |
| Rationing | The allocation of scarce goods and services using criteria other that price |
| Black market | Goods are sold illegally, without regard for government controls on price or quantity |
| Efficient resource allocation | Economic resources-land, labor, capital-wil |
| Adam Smith | Wrote "The Wealth of Nations"-explained that businesses prosper by finding our what people want and then providing it |
| Rent Control | A price ceiling placed on apartment rent |
| Financial Aid | Assistance in the form of grants and loans to help individuals in a time of need |
| Inventory | The quantity of goods that a firm has on hand |
| Subsidy | A government grant often given to farmers to guarantee a certain price for their product |
| Price System | Communication between buyers and sellers through the use of prices |
| Imperfect Conditions | A market structure in which only a few firms produce the same product |
| Invest | To use assets to earn income or profit |
Created by:
sudokken
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