Ch. 6.1
1. Equilibrium is unique because at it, the market for a good is stable.
2. Excess demand can result from the product is cheaper than some companies will sell it for.
3. Price floor is when the govt. says you can't go below a certain point, and price ceiling is when it can't go above a certain point.
4. Rent control makes it so that people cannot charge more than a certain amount for the house they are renting out.
5. a) management and professional
b) transportation, movement, and storage
service
c) The worker may be laid off due to the employer's inability to afford workers
6. a price ceiling can help the consumer's by making them pay less and hurt employers because they can't make money at the lower price.
7. a=equilibrium
b=disequilibrium point
c=supply
d=price ceiling
e=price flooring
f=demand
Ch. 6.2 1-5
1. When quantity suply is greater than quantity demanded
2. driving to different towns, stores
3. a)lower demand, lower price, lower equilibrium
b)increase production, lower price, lower equilibruim
c)increase demand, increase price, increase equilibrium
4. Some businesses will shut down, making the supply go down, making the demand go up, then the remaining ones will be able to raise price and continue to make money.
5. a) Increased, people are willing to pay more for same good
b) $20.00 and 150 units
c) $25.00 and 180 units
d) supply goes down, demand goes up, price equilibrium goes up
e) $30.00 and 210 units
Pg. 139-144
-in a free market, prices are a tool for distributing goods and resources throughout the economy
-Prices help move land labor and capital from the hands of the producers, and finished goods to the hands of the consumers
-prices provide a language for buyers and sellers
-the law of supply and the law of demand describe how people and firms respond to a change in prices
-for consumers, a low price is a green light to buy more of a good
-another important aspect of prices is that they are flexible
-when a supply shift or a demand shift changes the equilibrium in a market, price and quantity supplied need to change to solve problems of too much or too little demand
-supply shock - a sudden shortage of a good
-rationing - a system of allocating scarce goods and services using criteria other than price
-raising prices is the quickest way to resolve an excess demand
-a distribution system based on prices costs nothing to administer
-free market priceing distributes goods through millions of decisions made daily by consumers and suppliers
-one of the benefits of a market-based economy is the diversity of goods and services consumers can buy
-In a command economy, one organization decides what goods are produced and how much stores will charge for these goods
-to limit their costs, central planners restrict production to a few varieties of each product
-black market - a market in which goods are sold illegally
-all of the advantages of a free market allow prices to allocate resources efficiently
Ch. 6.3 1-4
1. Supply shock lowers the supply, raises the price, moving the equilibrium up.
2. Rationing is different from a price-based market system because rationing makes it so only the people that have lots of money and absolutely need the product will pay for it, while price-based market system makes it so the majority of people, who are willing to pay for it, can afford it.
3. A price based system works more efficiently than central planning because it is flexible, you can read the "language and signals," and it is free.
4. If I see a flat screen tv for $10 I would buy it. The price is fantastically low.
If I see a popsicle for $50,000 I wouldn't buy it. The price is way too high.
Ch. 6 Review 1-7, 9-16
1. equilibrium
2. search costs
3. rationing
4. supply shock
5. excess supply
6. shortage
7. price floor
9. Excess demand(people want more than what can be produced) and shortages(not enough goods) can lead to disequilibrium.
10. The govt. can set up price flooring, where they make a minimum on the amount that can be paid, and price ceiling, where the govt. sets up a max that can be charged for a good or service.
11. A price floor can make a good/service cost too much for some consumers.
12. The Prices act as a language because high prices are like a signal (green light) to buy more, declining prices (yellow light) mean cool your jets, and a stopped cost is telling you to slam on the brakes of production(red light).
13. The graph is a visual diagram of what the left says. You can read the specific prices and as the demand goes up (right) the price goes up(up).
14. The rent control laws are price ceilings that forces the equilibrium to stay in one spot. If it was removed then the people would raise their prices because they were raised when the demand went up as the rent control was in action.
15. Computers are great for lowering the search cost because it the internet is an efficient, cheap(almost free) way to find whatever you want to purchase and have done. As this cheap search cost continues the equilibrium goes up because people don't have to pay extra to find what they want, and will spend more on the specific good itself.
16. Prices in the free market lead to efficient resource allocation because it sends an overall message to producers and consumers on what to produce, buy what they want, and how to price things.
1. Equilibrium is unique because at it, the market for a good is stable.
2. Excess demand can result from the product is cheaper than some companies will sell it for.
3. Price floor is when the govt. says you can't go below a certain point, and price ceiling is when it can't go above a certain point.
4. Rent control makes it so that people cannot charge more than a certain amount for the house they are renting out.
5. a) management and professional
b) transportation, movement, and storage
service
c) The worker may be laid off due to the employer's inability to afford workers
6. a price ceiling can help the consumer's by making them pay less and hurt employers because they can't make money at the lower price.
7. a=equilibrium
b=disequilibrium point
c=supply
d=price ceiling
e=price flooring
f=demand
Ch. 6.2 1-5
1. When quantity suply is greater than quantity demanded
2. driving to different towns, stores
3. a)lower demand, lower price, lower equilibrium
b)increase production, lower price, lower equilibruim
c)increase demand, increase price, increase equilibrium
4. Some businesses will shut down, making the supply go down, making the demand go up, then the remaining ones will be able to raise price and continue to make money.
5. a) Increased, people are willing to pay more for same good
b) $20.00 and 150 units
c) $25.00 and 180 units
d) supply goes down, demand goes up, price equilibrium goes up
e) $30.00 and 210 units
Pg. 139-144
-in a free market, prices are a tool for distributing goods and resources throughout the economy
-Prices help move land labor and capital from the hands of the producers, and finished goods to the hands of the consumers
-prices provide a language for buyers and sellers
-the law of supply and the law of demand describe how people and firms respond to a change in prices
-for consumers, a low price is a green light to buy more of a good
-another important aspect of prices is that they are flexible
-when a supply shift or a demand shift changes the equilibrium in a market, price and quantity supplied need to change to solve problems of too much or too little demand
-supply shock - a sudden shortage of a good
-rationing - a system of allocating scarce goods and services using criteria other than price
-raising prices is the quickest way to resolve an excess demand
-a distribution system based on prices costs nothing to administer
-free market priceing distributes goods through millions of decisions made daily by consumers and suppliers
-one of the benefits of a market-based economy is the diversity of goods and services consumers can buy
-In a command economy, one organization decides what goods are produced and how much stores will charge for these goods
-to limit their costs, central planners restrict production to a few varieties of each product
-black market - a market in which goods are sold illegally
-all of the advantages of a free market allow prices to allocate resources efficiently
Ch. 6.3 1-4
1. Supply shock lowers the supply, raises the price, moving the equilibrium up.
2. Rationing is different from a price-based market system because rationing makes it so only the people that have lots of money and absolutely need the product will pay for it, while price-based market system makes it so the majority of people, who are willing to pay for it, can afford it.
3. A price based system works more efficiently than central planning because it is flexible, you can read the "language and signals," and it is free.
4. If I see a flat screen tv for $10 I would buy it. The price is fantastically low.
If I see a popsicle for $50,000 I wouldn't buy it. The price is way too high.
Ch. 6 Review 1-7, 9-16
1. equilibrium
2. search costs
3. rationing
4. supply shock
5. excess supply
6. shortage
7. price floor
9. Excess demand(people want more than what can be produced) and shortages(not enough goods) can lead to disequilibrium.
10. The govt. can set up price flooring, where they make a minimum on the amount that can be paid, and price ceiling, where the govt. sets up a max that can be charged for a good or service.
11. A price floor can make a good/service cost too much for some consumers.
12. The Prices act as a language because high prices are like a signal (green light) to buy more, declining prices (yellow light) mean cool your jets, and a stopped cost is telling you to slam on the brakes of production(red light).
13. The graph is a visual diagram of what the left says. You can read the specific prices and as the demand goes up (right) the price goes up(up).
14. The rent control laws are price ceilings that forces the equilibrium to stay in one spot. If it was removed then the people would raise their prices because they were raised when the demand went up as the rent control was in action.
15. Computers are great for lowering the search cost because it the internet is an efficient, cheap(almost free) way to find whatever you want to purchase and have done. As this cheap search cost continues the equilibrium goes up because people don't have to pay extra to find what they want, and will spend more on the specific good itself.
16. Prices in the free market lead to efficient resource allocation because it sends an overall message to producers and consumers on what to produce, buy what they want, and how to price things.