Economics Chapter 6 Review

What do most economists believe is the most efficient way to allocate resources?

competitive markets

Without prices, the three basic questions of WHAT, HOW, and FOR WHOM to produce are answered by _______ .

government

Which is the opposite of a surplus?

shortage

situation where quantity supplied is less than quantity demanded at a given price _______

shortage

price floor for agricultural products set by the government to stabilize farm prices

target price

What do low prices signal buyers to do?

buy more

What effect would a bumper crop most likely have on the price of that crop?

decrease

a simplified version of a complex concept or behavior expressed in the form of an equation, graph, figure, or diagram _______

economic model

price where quantity supplied equals quantity demanded _______

equilibrium price

quantity of output supplied that is exactly equal to the quantity demanded _______

equilibrium quantity

In a competitive market economy, prices are considered _______ .

neutral

the monetary value of a product _______

price

Which term best describes rent control?

price ceiling

the highest legal price that can be charged for a product _______

price ceiling

the lowest legal price that can be paid for a product _______

price floor

What do price ceilings and price floors prevent?

prices reaching equilibrium

Equilibrium is reached when what occurs?

quantity supplied equals quantity demanded

system of allocating goods and services without prices _______

rationing

situation where quantity supplied is greater than quantity demanded at a given price _______

surplus

Why have agricultural products been the object of many price stabilization efforts?

their prices tend to fluctuate widely