Economy: Chapter 6

A sudden lack of goods: supply shock shortage excess supply disequilibrium search costs

supply shock

What happens when wages are set by law above the equilibrium level? Firms employ fewer workers than they would at the equilibrium wage. Firms employ more workers than they would at the equilibrium wage. Firms tend to try to break the law and hire people at the equilibrium level. Firms hire more workers but for fewer hours than they would at the equilibrium wage.

Firms employ fewer workers than they would at the equilibrium wage.

What happens to a market in equilibrium when there is an increase in supply? Quantity supplied will exceed quantity demanded, so the price will drop. Quantity demanded will exceed quantity supplied, so the price will drop. Excess supply means that producers will make less of the good. Undersupply means that the good will become very expensive.

Quantity supplied will exceed quantity demanded, so the price will drop.

Which is an example of a good whose price goes down because of improvements in technology? computer printers running shoes hard-bound books pencils

computer printers

When quantity supplied and quantity demanded are not the same in a market: supply shock shortage excess supply disequilibrium search costs

disequilibrium

What happens when the supply of a nonperishable good is greater than what consumers want to buy? the good is discarded the good becomes a luxury and the price rises either the good is saved for later sale or the price is raised either the good remains unsold or the price drops

either the good remains unsold or the price drops

The point at which quantity supplied and quantity demanded are the same: rationing price floor excess demand surplus equilibrium

equilibrium

What condition has been reached when buyers will purchase exactly as much as sellers are willing to sell? supply and demand excess demand equilibrium price floor

equilibrium

When quantity demanded is more than quantity supplied: rationing price floor excess demand surplus equilibrium

excess demand

When quantity supplied is more than quantity demanded: supply shock shortage excess supply disequilibrium search costs

excess supply

Why did Communist governments use a command economic system for many years? as a way to avoid the expense and difficulties of a free market as a method of keeping consumers from getting what they wanted to limit the costs of production of many goods in an attempt to create a society in which everyone was equal

in an attempt to create a society in which everyone was equal

What is the name of the least amount that legally may be paid to most workers for an hour of work? equilibrium price supply cost price floor minimum wage

minimum wage

A minimum price for a good or service: rationing price floor excess demand surplus equilibrium

price floor

A system of allocating scarce goods and services using some criteria other than price: rationing price floor excess demand surplus equilibrium

rationing

The price ceiling that was used to control the price of housing in New York City and other cities was called ____________ . rent control rent abatement housing control equilibrium price

rent control

The financial and opportunity costs consumers pay when looking for a good or service: supply shock shortage excess supply disequilibrium search costs

search costs

Situation in which quantity demanded is greater than quantity supplied: supply shock shortage excess supply disequilibrium search costs

shortage

Situation in which quantity supplied is greater than quantity demanded: rationing price floor excess demand surplus equilibrium

surplus

On what type of goods do governments generally place price ceilings? those that are cheap but could become more expensive without the ceiling those that are essential but too expensive for some people those that are essential and cheap those that are not necessary but have become customary

those that are essential but too expensive for some people

Why did the U.S. government use rationing for some foods and consumer goods during World War II? to guarantee each civilian a minimum standard of living in wartime to keep sellers from raising prices on necessary goods to earn more money to support the military because the English government had also declared rationing

to guarantee each civilian a minimum standard of living in wartime

Which is a situation that makes the market behave inefficiently? when both consumers and producers are fully informed about a product when producers have the power to find out exactly what to produce when consumers do not have enough information to make good choices when the market is in perfect competition and prices are high

when consumers do not have enough information to make good choices