Download 6-3 The Price System at Work

Chapter 6 – Prices and Decision Making
6-3 The Price System at Work
CA Standards:
12.1 Students understand common economic terms and concepts and
economic reasoning
12.2.2 Discuss the effects of changes in supply and/or demand on the
relative scarcity, price, and quantity of particular products.
Objectives:
• Explain how prices allocate resources between markets.
• Describe the consequences of having a fixed price in a market.
• Understand what is meant when markets talk.
Write definition of key terms found on
page 152 Use glossary in textbook
Read pages 152 - 161
Economics: Principles & Practices
Prepare for Open notebook Quiz
 Key
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Terms
Rebate
Price Ceiling
Minimum Wage
Price Floor
Target Price
Non-Recourse Loan
Deficiency Payment
page 140
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Prices are important because they help producers and
consumers make decisions. The overall economy, however, is
made up of many markets for many different products. In
order to understand how the economy operates as a whole,
the role of prices in this larger setting must be examined.
1. What is a price ceiling?
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- a maximum legal price that can be charged.
2. Is the usual result of a price ceiling a
shortage or a surplus?
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- a shortage
3. What is a price floor?
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- lowest legal price that can be paid.
4. Is the usual result of a price floor a shortage or a
surplus?
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- a surplus
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5. What are three factors that economists
consider when predicting prices?
A. Changes in supply
B. Demand elasticity
C. Changes in demand
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6. What is meant by the phrase – Markets
talk?
It is a phrase often used to mean that prices are
moving up or down significantly, reflecting the
wishes of market participants.
Be prepared for open
notebook quiz