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Econ Chapter 6
| Question | Answer |
|---|---|
| a situation in which the quantity supplied and the quantity demanded at a particular price are equal | market equilibrium |
| the price at which the quantity demanded equals the quantity supplied | equilibrium price |
| the result of quantity supplied being greater than quantity demanded. | surplus |
| the result of quantity demanded being greater than quantity supplied. | Shortage |
| a situation in which quantity supplied and quantity demanded are not in balance | disequilibrium |
| a situation in which producers sell goods and services at prices that best balance the twin desires of making the highest profit and luring customers away from rival producers | competitive pricing |
| a benefit offered to encourage people to act in a certain way | incentive |
| an established maximum price that sellers may charge for a product | price ceiling |
| an established minimum price that buyers must pay for a product | price floor |
| the lowest amount, established by law, that an employer may pay a worker for one hour of work | minimum wage |
| a system in which the government allocates goods and services using factors other than price | rationing |
| the illegal business of buying or selling goods or services in violation of price controls or rationing | black market |
| Equilibrium price is the price at which the quantity of a product demanded by consumers and the quantity supplied by producers | are equal |
| On a market demand and supply graph, the vertical axis shows | prices |
| On a market demand and supply graph, the point of market equilibrium always happens | at the point where the demand and supply curves intersect |
| If a producer supplies 25 pizzas, market equilibrium is reached when consumers demand | 25 pizzas from this producer |
| When there is a shortage, producers raise prices in an attempt to | equalize the quantity supplied and demanded |
| Suppliers often reduce prices because they | have a surplus of products to sell |
| A state of disequilibrium happens when an imbalance exists between | . quantity supplied and quantity demanded |
| What would be the likely result if a company increased production of toy rabbits to meet increasing demand, but then demand dropped sharply and suddenly? | a product surplus |
| A gas station owner decides to charge less for his gasoline than the gas station across the street. Doing this is an example of | competitive pricing |
| In the price system of a market economy, prices are determined by | market forces |
| The price system helps to allocate resources efficiently because prices will adjust until | the maximum number of goods and services are sold |
| Companies engage in competitive pricing to | gain a bigger share of the market |
| When consumers demand more goods and services at every price, equilibrium price will | rise |
| When producers supply more, equilibrium price will | fall |
| A surplus of a particular good is often a signal for a consumer to | seek bargain prices for that good |
| A shortage of a particular good is often a signal for a producer to | raise the prices of that good |
| Other companies found competing with Dell computers difficult because Dell's | prices were much lower |
| A baseball team limiting the amount charged for buying a ticket is | setting a price ceiling |
| Rent control has become less common because it | caused housing shortages |
| If a government set a limit on the cost of baseball bats, this type of action would be called | setting a price ceiling |
| Why does the government sometimes establish price floors? | to increase income for certain producers |
| Which good does the government often establish price floors for? | milk |
| To make sure an army receives needed goods during a war, a government would often establishes | rationing |
| The United States instituted rationing during | World War II |
| Rationing would most likely result from a | nation getting involved in a war |
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