ECON CH. 6 - GUIDED READING

increasingly, people are buying more fuel-efficient cars that burn less gasoline per mile. This saves people money when gas prices are high for long periods of time. In response to this demand for fuel efficiency, automakers are manufacturing cars that get better mileage. Many automakers are even making cars that run on electric batteries and don't use gasoline at all. How has the price of gasoline acted as an incentive for consumers to demand a different type of car? How has it sparked innovation in the auto industry? How would you respond as a car buyer to the high price of gasoline?

Since the price of gasoline went up, consumers have demanded for a different type of car so they wont have to spend a majority of their income on gas. It has sparked innovation in the auto industry by creating new types of cars with improvements in technology. As a car buyer, I would try to be as conservative as I can be with my gas rather than going out buying a brand new car that I do not know whether there are still kinks or not within the new cars programming.

As the world population grows, so will the demand for more resources and consumer goods. What do you think will happen to the price of resources that are in limited supply, such as gasoline or some types of metal? What might individuals, businesses, and governments do to try to raise people's standard of living while keeping prices at reasonable (and affordable) levels?

The price of resources that are limited will increase. They will create substitutes.

Some ________ is necessary so that buyers and sellers reach a ________ on the price of a product.

adjustment, compromise

The ________ price floor is set by the government to stabilize farm prices.

agricultural

The weather is a key factor that may change the supply of __________________ products, whose prices may __________________ if the weather is unfavorable.

agricultural, fluctuate

Price ceilings set for rent control are typically ________ and may not be high enough for ________ to make a profit.

arbitrarily, landlords

High gas prices were an incentive to use plant-based ________ , which shifted productive ________ to a new economic sector.

biofuels, resources

The imposition of a price ________ may lead to ________ of products as manufacturers reduce production due to lower profits.

ceiling, shortage

In __________ markets, prices __________ to changing circumstances in supply and demand.

competitive, adjust

In a perfectly ________ economy, prices are ________ in that they favor neither the producer nor the consumer.

competitive, neutral

When investors have a lack of ________ in the economy, it often leads to lower ________ prices.

confidence, stock

A natural disaster may severely lower the supply of a natural resource that is in high ________ , and this causes the ________ of that resource to increase dramatically.

demand, supply

Too often, it requires ________ conditions before political parties and the president can agree enough to implements policies to achieve its economic and ________ goals.

extreme, seven

Some of the problems with rationing include perceived ________ , the cost of administration, distorted ________ , and abuse and misuse.

fairness, incentives

People are ________ with the fact that products have prices, and a reasonable or sale price is often an ________ to consumers to purchase a product.

familiar, understanding

When government sets a price ________ , the product becomes more profitable to produce and a ________ may result.

floor, surplus

The price of ________ tends to go up when the economy is in a ________ .

gold, decline

In times of crisis, the ________ may impose a system of ________ to make sure that everyone gets their fair share of needed products.

government, rationing

Because demand for gas is basically ________ , when gas prices are ________ , people spend a greater portion of their income on gas and have less money to spend elsewhere.

inelastic, high

Competition in the ________ ensures that resources are allocated ________ .

market, efficiently

In a ________ economy, prices are ________ and can change as conditions and resources change.

market, flexible

In a ________ economy, economic transactions are ________ , representing a compromise between buyers and sellers that benefits both parties.

market, voluntary

In the U.S. ________ free enterprise economy, the government may set ________ at a particular level to achieve certain social goals.

modified, prices

Price is the ________ value of a product and helps us make economic ________ .

monetary, decisions

A ________ loan from the government to a necessary producer does not have to be ________ .

non-recourse, repaid

The ________ system is more efficient when markets are ________ .

price, competitive

When the price of oil increases sharply, that may indicate decreased ________ and may indicate economic ________ .

quantity, difficulty

When there is too little of a product to meet demand, the resulting ________ leads to an ________ in price.

shortage, increase

The equilibrium price for an item is the point at which the quantity ________ for the item equals the quantity ________ of the item offered for sale.

supplied, demanded

The equilibrium quantity represents a situation in which the quantity ________ is equal to the quantity demanded at the ________ price.

supplied, purchased

When too much of a product is made, there is a ________ that tends to make the price of the product ________ .

surplus, decrease