Chapter 6 Study Guide

Suppliers often reduce prices because they -have shortage of products to sell -have surplus of products to sell -want to decrease consumers demand -want to increase product supply

have a surplus of products to sell

Supply can be changed by -equilibrium -income -input costs -substitutes

input costs

On a market demand and supply graph, the horizontal axis shows -demand -equilibrium -prices -quantity

quantity

A state of disequilibrium happens when an imbalance exists between -quality supplied and quality demanded -quality supplied and quantity demanded -quantity supplied and quality demanded -quantity supplied and quantity demanded

quantity supplied and quantity demanded

A shortage of a particular good is often a signal for a producer to -lower production -lower price -raise price -shift production to another good

raise the prices of that good

To make sure an army receives needed goods during a war, a government would often established -black market -price ceiling -shortages -rationing

rationing

When consumers demand more goods and services at every price, equilibrium price will -fall -fluctuate -rise -stay the same

rise

A baseball team limiting the amount charged for buying a ticket is -setting equilibrium price -setting min price -setting price ceiling -setting price floor

setting a price ceiling

If a government set a limit on the cost of baseball bats, this type of action would be called

setting a price ceiling

On a demand and supply graph, an increase in demand causes the demand curve to -fluctuate right and left - shift left -shift right -stay in same position

shift to the right

The price system helps to allocate resources efficiently because prices will adjust until -equal # of goods and services sold -max # of goods and services sold - min # of goods and services sold -more goods than services sold

the maximum number of goods and services are sold

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? -market equilibrium -price ceiling -product shortage -product surplus

a product surplus

A store would experience equilibrium if it supplied 25 DVDs -consumers demanded 25 -consumers demanded 20 -consumers demanded 30 later supplied 25 more

and consumers demanded 25

Equilibrium price is the price at which the quantity of a product demanded by consumers and the quantity supplied by producers -are different -are equal -is higher for the product demanded -is higher for the product supplied

are equal

If a shirt manufacturer has a surplus of two shirts when they're priced at $14 each and a shortage of two shirts at $10 each, market equilibrium is likely at -$11 per shirt -$12 -$13 -$15

$12 per shirt

If a producer supplies 25 pizzas, market equilibrium is reached when consumers demand -20 pizzas -25 pizzas -30 pizzas -35 pizzas

25 pizzas from this producer

The United States instituted rationing during -Korean War -Persian Gulf War -Vietnam War -World War II

World War II

On a market demand and supply graph, the point of market equilibrium always happens -at the highest point on demand curve -at point where demand and supply curves intersect -at lowest point of supply curve -at the center point, irrespective of the curves

at the point where the demand and supply curves intersect

A fruit stand would experience a surplus if it supplied 20 oranges -consumers demanded 15 -consumers demanded 25 -later supplied 20 more -consumers demanded 20

but consumers demanded 15

A coffee shop would experience a shortage if it supplied 30 muffins -consumers demanded 25 -consumers demanded 30 - later supplied 30 more -consumers demanded 35

but consumers demanded 35

Rent control has become less common because it -caused housing shortage -caused housing surpluses -encouraged black market -led to rationing

caused housing shortages

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 -setting a price floor -setting a price ceiling -rationing a product

competitive pricing

When there is a shortage, producers raise prices in an attempt to -separate the quantity supplied and demanded -raise quantity demanded -equalize supplied and demanded -lower quantity supplied

equalize the quantity supplied and demanded

At a cost of 15 dollars per CD, Jake's Audio store supplies 50 CDs and 50 CDs are demanded by consumers. What does the 15 dollars per CD represent? -disequilibrium price -equilibrium price -price ceiling -price floor

equilibrium price

Companies engage in competitive pricing to -gain bigger share of market -increase employee salaries -prepare for bankruptcy -reduce share of market

gain a bigger share of the market

Imagine that a company supplies 20 shirts, and 20 shirts are demanded by consumers. Which of the following has that company achieved: -market disequilibrium -market equilibrium -market shortage -market surplus

market equilibrium

In the price system of a market economy, prices are determined by -central planning -market forces -political forces -private investors

market forces

Lower prices generally -discourage consumers from buying -discourage producers from leaving a market -motivate consumers to buy -motivate producers to enter a market

motivate consumers to buy

Rationing would most likely result from a

nation getting involved in a war

The maximum amount that sellers may charge for a good or service is called a -max wage -min wage -price ceiling -price floor

price ceiling

Consumers would have an added incentive to buy if the -price for diamond jewelry sharply decreased -price for jeans sharply increased -supply of novel decreased causing price to rise -supply of oranges remained consistent

price for diamond jewelry sharply decreased

A producer would have an added incentive to enter a market if the -price of microwave sharply decreased -price for tennis shoes sharply increased -supply of apples increases causing surplus -supply of cell phones satisfied consumer demand

price for tennis shoes sharply increased

A market demand and supply schedule lists the quantity supplied and demanded and the -ceiling -shortages -prices -surplus

prices

On a market demand and supply graph, the vertical axis shows -demand -equilibrium -prices -quantity

prices

The demand curve is plotted by using a product's -prices and qualities -production costs and qualities -prices and quantities - production costs and quantities

prices and quantities

A surplus happens when -prices too low relative to consumer demand -prices too high relative to consumer demand -prices too low relative to producers demand -prices too high relative to producer demand

prices are too high relative to consumer demand

Other companies found competing with Dell computers difficult because Dell's -computers were very cool -prices were much lower -quality control was poor -supply was too large

prices were much lower

Why did Michael Dell sell computers for a lower price than his competitors? -gain larger share of market -make profit with little customer contact -make quick profit and then sell his business -show inferior quality of his competitors' computers

to gain a larger share of the market

Equilibrium price would decrease if a -hurricane destroyed supply of coffee -farm supplied enough wheat to satisfy demand -bracelet became popular increasing demand -shoe went out of style decreasing demand

type of shoe went out of style, decreasing demand

Which of the following would cause equilibrium price to increase? - farm expands, increasing supply of corn -manufacturer supplies enough jeans for demand -perfume goes out of style, decreasing demand -typhoon sharply decreases supply of bananas

typhoon sharply decreases the supply of bananas