Ch 6 econ

There is no way to represent equilibrium on a graph

minimum set on the price of a good or service

A price-based system ensures the most efficient use of resources

Costs added because you spend hours on line looking for a TV with free shipping

If we didn't have price, consumers would have to

equilibrium

technology decreases cost of production

If demand falls, suppliers will increase price

Taste for sneakers declines, what happens to price & quantity sold

maximum set on the price of a good or service

Free markets are the most efficient because they are flawless

Price ceilings are set by the government to protect consumers

any time the market is not in equilibrium

pollution caused by a supplier is an example of this

perfect balance between supply & demand

more demand than the market is supplying

nothing happens

sudden decrease in supply causes prices to soar

Happens when an increase in technology lowers cost of production

prices decline rapidly

average income of population drops

A high price is like a green light to suppliers to supply more

prices increase rapidly

Minimum wage is a perfect example of a price ceiling

A leftward shift of the supply curve might mean

Price change is

If price falls, consumers will demand more

What two factors move price into equilibrium

If the income of most consumers of air travel increases, what happens to the equilibrium P & Q of air travel?

happens when consumers believe that prices will be cheaper in the future

A low price is like a green light to consumers to buy more

future expectation that the good will be cheaper to buy next month

economy where one or more people set supply & price

Eggs are said to be healthy and chicken husbandry has increased the number produced. What happens to P & Q of eggs?

population increases dramatically

Technology improves cell phone production, what happens to price & quantity sold?

When a company has more supply than is demanded

When the supply or demand shifts, the market will

shortage

Suppose the price of tea rises sharply, what happens to the price & qty of coffee (sub)

surplus

any sale of illegal goods

By selling alcohol to a minor you are participating in a black market

An example of a price ceiling