Download Chapter 16 Lesson 3 (Demand and Supply in a Market

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Chapter 16 Lesson 3 (Demand and Supply in a Market Economy)
1.) What is the difference between a consumer and a producer?
Consumers buy goods & services and producers provide goods & services
2.) Explain the four (4) parts of the definition of demand.
1.) Amount – measures amount goods & services consumers are willing to buy
2.) Willing to buy – consumers must be willing to buy or there is no demand
3.) Able to buy – consumers must have the ability to buy the good or service
4.) Price – quantity consumers are willing and able to buy with a particular price
3.) What is the amount of a good or service that producers are willing and able to sell?
Supply
4.) What happens to the demand when prices go up?
Demand goes down
5.) What happens to the supply when prices go up?
Supply goes up
6.) Draw AND label the demand and supply curve. Circle the equilibrium price.
7.) In a market economy, what keeps the price down for consumers to buy goods and services?
Competition
8.) When a store has a sale, it cuts the prices on the goods it sells. Is that more likely to happen
when there is a surplus or when there is a shortage? Explain.
When there is a surplus because you have more goods than needed and lowering the price should
increase the demand
9.) What three (3) changes will cause demand to rise?
1.) Number of consumers
2.) Consumer income
3.) Change in consumer preferences
10.) Name two (2) key factors that affect supply.
1.) Number of suppliers (companies)
2.) Cost of production
11.) What are three (3) functions of prices in a market economy?
1.) Help make economic decisions
2.) Measure value
3.) Send signals to both consumers and producers
12.) Are prices more changeable in a market economy or in a command economy? Why?
Prices change more in a market economy because they are controlled by consumer demand and
producer supply whereas in a command economy they are controlled by the government