CIVICS - 21-3 GRA
What is the difference between a price ceiling and a price floor?
A price ceiling is a maximum price that can be charged for a good or service and a price floor is the minimum price that can be charged
Which of the following countries has a command economy?
A. United States B. North Korea C. Mexico D. France
The point where supply and demand achieve balance is known as the
A. market economy B. consumer shortage C. equilibrium price D. market surplus
In the U.S. economy, what functions as a signal to help businesses and consumers make decisions?
A. price B. supply C. demand D. surplus
Which of the following is NOT an advantage of prices in a competitive market economy?
A. prices are flexible B. prices are neutral C. prices are stable D. prices provide for freedom of choice
What signals that a price is too high?
A. shortage B. high demand C. market supply D. surplus
If the price of a product is above its equilibrium price, what is the result?
The result is a shortage
Price Floor
a government minimum price that can be charged for goods and services
Price Ceiling
a government set maximum price that can be charged for a good or service
Market
any place or mechanism where buyers and sellers of a good or service can get together to exchange goods and services
What signal does a high price send to buyers and sellers?
it signals that the good or service is aimed at a smaller number of consumers that are willing to pay a higher price
Shortage
the amount by which the quantity demand is higher than the quantity supplied
What is a shortage? What does a shortage signal to sellers?
the amount by which the quantity demand is higher than the quantity supplied; A shortage signals to sellers that the price is too low
Surplus
the amount in which the quantity supplied is greater than the quantity demanded
What is a surplus?
the amount in which the quantity supplied is greater than the quantity demanded
How are prices determined in command economies?
the government determines the total quantity and variety of goods produced, therefore they are offer them at lower prices
What does it mean to say "prices are neutral"?
they favor neither the producer nor the consumer
