Download Economics Homework 6 - White Plains Public Schools

Homework #6
Economics/E. Napp
This Week’s Glossary:
Name: _____________________________
Date: _____________________________
1- Equilibrium
 Equilibrium is the point at which quantity demanded and quantity supplied are
equal.
 It is the point of balance between price and quantity.
 At equilibrium, the market for a good is stable.
 Quantity supplied equals quantity demanded.
2- Disequilibrium
 Disequilibrium describes any price or quantity that is not at equilibrium.
 Quantity demanded does not equal quantity supplied.
 Excess demand or a shortage is an example of disequilibrium.
 Excess supply or a surplus is an example of disequilibrium.
 To fix a market in disequilibrium, the price must be raised.
Multiple-Choice Questions:
1. Equilibrium is
(1) When quantity supplied is not equal to
quantity demanded in a market.
(2) The point at which quantity demanded
and quantity supplied are equal.
(3) When quantity demanded is more than
quantity supplied.
(4) When quantity supplied is more than
quantity demanded.
2. Excess supply
(1) Is when quantity supplied is more than
quantity demanded
(2) Is when quantity demanded is more than
quantity supplied
(3) Describes any price or quantity not at
equilibrium
(4) Is the point at which quantity demanded
is equal to quantity supplied
3. When there is excess demand, there is
(1) Excess supply.
(2) Disequilibrium.
(3) Equilibrium.
(4) A price floor.
4. All of the following are disadvantages of
rent control EXCEPT that it
(1) Leaves many customers without housing.
(2) Gives landlords an incentive to attract
renters.
(3) Might encourage discrimination by
landlords and bribery.
(4) Results in lower quality apartment
buildings.
5. A maximum price that can be legally
charged for a good or service is a
(1) Maximum wage.
(2) Minimum wage.
(3) Price ceiling.
(4) Price floor.
6. Surplus is
(1) The point at which quantity demanded
and quantity supplied are equal.
(2) The financial and opportunity costs
consumers pay when searching for a good or
service.
(3) A situation in which quantity supplied is
greater than quantity demanded.
(4) A situation in which quantity demanded
is greater than quantity supplied.
7. Shortage is
(1) The point at which quantity demanded
and quantity supplied are equal.
(2) The financial and opportunity costs
consumers pay when searching for a good or
service.
(3) A situation in which quantity supplied is
greater than quantity demanded.
(4) A situation in which quantity demanded
is greater than quantity supplied.
8. Minimum wage is
(1) The minimum price that an employer
can pay a worker for an hour of labor.
(2) The financial and opportunity costs
consumers pay when searching for a good or
service.
(3) A situation in which quantity supplied is
greater than quantity demanded; also
known as excess supply.
(4) Situation in which quantity demanded is
greater than quantity supplied; also known
as excess demand.
9. Search costs are
(1) The point at which quantity demanded
and quantity supplied are equal.
(2) The financial and opportunity costs
consumers pay when looking for a good or
service.
(3) A situation in which quantity supplied is
greater than quantity demanded; also
known as excess supply.
(4) A situation in which quantity demanded
is greater than quantity supplied; also
known as excess demand.
10. An increase in demand is represented by
a(n)
(1) Shift to the right of the demand curve.
(2) Shift to the left of the demand curve.
(3) Upward movement along the demand
curve.
(4) Downward movement along the demand
curve.
11. In the Wealth of Nations, Adam Smith
argues that the baker and butcher provide
people with food primarily to
(1) Provide a service.
(2) Earn a profit.
(3) Offer a charity.
(4) Connect with their community.
12. What is one reason for rationing?
(1) There is a shortage of a particular good.
(2) There is a surplus of a particular good.
(3) The price of a particular good has gone
down.
(4) The good is being sold on the black
market.
13. Which of the following is NOT an
example of one of the four main advantages
of prices in a free market economy?
(1) Consumers are willing to pay a higher
price for a good, so producers manufacture
more of the good.
(2) The price of an item is low, so consumers
see it as a signal to buy the item.
(3) Producers make a greater profit when
the retail price of an item is lowered.
(4) The price of a good can be quickly
increased in response to excess demand.
14. What is the quickest way to resolve
problems from a supply shock?
(1) raise prices
(2) lower prices
(3) rationing
(4) decrease supply
15. Which of the following correctly
illustrates how prices serve as signals to
consumers?
(1) A high price signals to consumers that
they should buy a good.
(2) A low price signals to consumers that the
good is not well-made.
(3) A low price signals to consumers that
they should buy a good.
(4) None of the above.
Questions:
1- How does a market in equilibrium differ from a market in disequilibrium?
2- Why is price a signal to consumers?
3- When might government officials consider rationing?
4- Why do government officials sometimes use price ceilings?
5- Why do economists generally discourage the use of price ceilings?
6- How can price bring a market back into equilibrium?
7- Why do prices for winter jackets generally fall in February?
Analyzing Cartoons:
1- Explain the economic meaning of the following cartoon.
2- Explain the economic meaning of the following cartoon.