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NAME: __________________________
CHAPTER 6 GUIDE
1. Buyers always want to pay the _______________________ price, while sellers hope to sell at the
____________________________ price.
2. In an uncontrolled market, the price of a good and quantity sold will settle at a point where the
____________________________ equals the ________________________________ .
3. The point at which quantity demanded and quantity supplied are equal is called _______________.
4. Use Figure 6.1 Finding Equilibrium (p. 126), to answer the following:
What is the equilibrium price per slice? ________________
What is the equilibrium quantity of slices produced per day? ________________
5. When graphing equilibrium, the equilibrium price and quantity can be found where quantity
________________ equals quantity ________________, or the point where the supple curve
________________the demand curve.
6. _________________________ describes any price or quantity not at equilibrium; when quantity
supplied is not equal to quantity demanded in a market.
7. The problem of __________________________ occurs when quantity demanded is more than
quantity supplied.
8.
What do producers do to solve the problem of excess demand? ___________________________
(Remember the first lesson - this is what you do when you have a shortage (too much demand))
9.
The problem of __________________________ occurs when quantity supplied is more than
quantity demanded.
10. What do producers do to solve the problem of excess supply? ___________________________
11. Using figure 6.2 Excess Demand and Excess Supply (p. 127), why are sales lower at $1.00 a slice
than at $2.00 a slice?
12. The government can impose a _____________________, or a maximum price that can legally
charged for a good.
13. The government can also create a _____________________, or a minimum price for a good or
service.
14. New York City has price ceilings on apartments called _____________________.
(OVER)
15. Rent control helps some people, but it also creates a housing market with ________,
____________ homes.
16. Are economists for or against rent control? Explain.
17. One well-known price floor is the _____________________, which sets a minimum price that an
employer can pay a worker for an hour of labor.
18. Using figure 6.4 Effects of Minimum Wage (p. 131), how big is the surplus of workers when the
minimum wage is $5.15 an hour?
19. When a supply or demand curve shifts, a new _______________ occurs. The _____________ and
________________ move toward the new equilibrium.
20. A ____________ is a situation in which quantity supplied is greater than quantity demanded. This
is also known as ___________ supply.
21. Figure 6.6 A Change in Supply (p. 135), explains why products are __________ and in short _____
when first introduced, but become _____________ and in greater ___________ as time goes on.
22. Excess demand creates a _________________. As a result, producers will ________________ the
price to get back to a point of equilibrium (see Figure 6.7 A Change in Demand (p. 136).
23. Excess demand also appears in the form of ____________________ - the financial and opportunity
costs consumers pay when searching for a good or service.
24. In a free market, ____________ are a tool for distributing goods and resources throughout the
economy. They are nearly almost always the most efficient way to allocate, or distribute resources.
25. Drought, floods, or frost can kill crops and cause __________________ which is a sudden shortage
of a good.
26. _________________ is a system of allocating scarce goods and services using criteria other than
price. It is expensive and can take a long time to organize.
27. Once again, _____________ prices is the quickest way to resolve excess demand.
28. Unlike central planning, a distribution system based on prices costs ____________ to administer.
29. When people conduct business without regard for government controls on price or quantity, they
are said to do business on the __________________.
30. _______________________, also known as externalities, are costs of production that affect people
which have no control over how much of a good if produced.