Chapter 6
When consumers demand more goods and services at every price, equilibrium price will...
increase
f a typhoon greatly decreased the supply of bananas, equilibrium price for bananas would...
increase
A shortage of a good is often a signal for the producer to...
increase the prices of that good
When the demand for butter ______ the demand curve for butter would shift to the ______, this could be caused by a number of reasons (Known as the determinants of demand)
increases, right
In the price system, ______ encourage producers to act in certain ways consistent with...
prices, their own best interest
A surplus of a particular good is often a signal for a consumer to...
seek lower prices for that good
An increase in demand causes the demand curve to...
shift to the right
Any price that is below a product's equilibrium price will result in a ______ that will force the price to ______
shortage, increase
A ______ would likely result if a company increased production of a good to meet increasing demand but then demand dropped sharply and suddenly
surplus
Results when the quantity supplied is greater than the quantity demanded
surplus
Any price that is above a product's equilibrium price will result in a ______ that will force the price to ______
surplus, decrease
When overall supply and demand both increase we know for certain that...
the equilibrium quantity will increase
The price system helps to allocate resources efficiently because prices will adjust until...
the maximum amount of goods and services are sold
Equilibrium price would fall when...
there is a decrease in supply and demand but demand decreases more
The success of the Dell Company in the late 1990's and early 2000's was caused by
Producing computers at a lower price than competitors
A price that is below market equilibrium will cause...
a shortage and prices would have to increase to reach market equilibrium
If a shirt manufacturer has a surplus of 2 shirts when priced at $14 each and a shortage of 2 shirts when they are $10 each, the market equilibrium will likely be set at ______ (The average of the other 2 prices)
$12
A market will stay in equilibrium until...
1 of the factors affecting supply or demand changes
On a demand and supply graph, the point of market equilibrium always occurs...
At the point where the demand and supply curves intersect
The illegal buying and selling of goods in violation of price controls
Black Market
When exchange takes place in markets...
Buyers and Sellers expect to gain (Mutual benefit)
The twin desires of making the highest profit and luring customers away from rival producers often results in...
Competitive Pricing
The equilibrium price in the market is determined by ______ ___ ______. (What 2 groups)
Consumers and Producers
the price at which the quantity demanded and the quantity supplied are equal
Equilibrium
A decrease in demand causes
Equilibrium prices to decrease
Suppliers often reduce prices because they...
Have a surplus of products to sell
One factor that can change overall supply
Input costs
Results when the quantity supplied of a good is equal to the quantity demanded at a particular price
Market Equilibrium
In the price system of a market economy, prices are determined by ______ (Supply & Demand)
Market Forces
The ______ amount that producers may charge for a good or service is called a Price Ceiling
Maximum
The ______ amount that consumers must pay for a good or service is called a price floor
Minimum
What is an example of a Price Floor?
Minimum wage
A ______ leads to a ______, since it is set below the equilibrium price
Price Ceiling, shortage
When there is a shortage, producers ______ prices in an attempt to...
Raise, equalize the quantity supplied and demanded
A system in which the government allocates goods and services using factors other than price
Rationing
______ has often resulted from a nation ______
Rationing, becoming involved in a war
A ______ results when the quantity demanded is greater than the quantity supplied
Shortage
Equilibrium price would increase when...
Supply decreases and demand stays the same
A fruit stand would experience a _____ if it supplied 20 oranges but consumers demanded 15
Surplus
The U.S. instituted rationing during...
WWII
Equilibrium price would decrease if... a good or service went out of style, leading to a decrease in demand
a good or service went out of style, leading to a decrease in demand
Rent control (a price ceiling) has become less common because it...
caused housing shortages
Companies engage in _____ pricing to gain a bigger share of the market
competitive
If producers supply more while demand remains the same, equilibrium price will...
decrease
The Price System is ______. Meaning it can quickly adapt to changes
flexible
Lower prices generally...
motivate consumers to buy
Higher prices generally...
motivate producers to enter a market
A demand curve is plotted by using a product's...
price and quantity demanded
When there is a decrease in supply and demand but supply decreases more we know that...
price will increase and equilibrium quantity will decrease
A surplus happens when...
prices are too high relative to consumer demand
A producer would have an added incentive to enter a market if...
prices were rising sharply