Chapter 6 Economics review

During a housing crisis in the early 1940s, which of the following was used by some local governments to prevent inflation?

price ceilings

A minimum price for a good or a service is a

price floor.

Which of the following is NOT a way that the government intervenes in the economy?

price holds

What is the quickest way to resolve problems from a supply shock?

raise prices

A system of allocating scarce goods and services using criteria other than price is

rationing.

A price ceiling placed on the monthly cost of renting a house or apartment is a(n)

rent control.

An increase in demand is represented by a(n)

shift to the right of the demand curve.

"Costs of production that affect people who have no control over how much of a good is produced" is referring to

spillover costs.

Which of the following correctly illustrates how prices serve as signals to consumers?

A low price signals to consumers that they should buy a good.

Which of the following is NOT an example of one of the four main advantages of prices in a free market economy?

Producers make a greater profit when the retail price of an item is lowered.

What is one reason for rationing?

There is a shortage of a particular good.

A market in which goods are sold illegally is

a black market.

Shortage is

a situation in which quantity demanded is greater than quantity supplied.

Surplus is

a situation in which quantity supplied is greater than quantity demanded.

A sudden shortage of a good is called

a supply shock.

Disequilibrium

describes any price or quantity not at equilibrium; when quantity supplied is not equal to quantity demanded in a market.

When there is excess demand, there is

disequilibrium

In the Wealth of Nations, Adam Smith argues that the baker and butcher provide people with food primarily to

earn a profit

If for a certain market, the quantity demanded is 200 units and the quantity supplied is 250 units, then there is

excess supply in this market.

All of the following are disadvantages of rent control EXCEPT that it

gives landlords an incentive to attract renters.

What is an exception to the general idea that markets lead to an efficient allocation of resources?

imperfect competition

Excess supply

is when quantity supplied is more than quantity demanded.

A maximum price that can be legally charged for a good or service is a

price ceiling.

Search costs are

the financial and opportunity costs consumers pay when looking for a good or service.

Minimum wage is

the minimum price that an employer can pay a worker for an hour of labor.

Equilibrium is

the point at which quantity demanded and quantity supplied are equal.

With the advances of technology and increased availability over time for compact disc players,

the supply curve for compact disc players has shifted right.

If the quantity demanded of a new mountain bike is 8,000 and the quantity supplied is 6,000, then

there is a shortage of 2,000 bikes.

If automobile workers went on strike causing a decreased supply of cars, the supply curve would shift inward to the left, and

there would be an eventual upward movement along the demand curve, reestablishing equilibrium.

An increase in quantity supplied is represented by a(n)

upward movement along the supply curve.