Which of the following are ways the government controls markets?

price ceilings and price floors

In response to rising car traffic, demand for bike went up. The new equilibrium point will show

more bicycles sold, but at a higher price.

A shortage will develop when

the market price is below the equilibrium price.

When is a market at equilibrium?

when quantity demanded equals quantity supplied

what happens to the price of a good or service when a shortage of that good or service occurs?

It increases until quantity demanded = quantity supplied.

How do price changes drive markets toward equilibrium?

They increase or decrease supply or demand.

What did suppliers do when the supply of digital cameras increased?

Suppliers lowered prices on cameras.

How does the free market benefit from the profit incentive?

The profit incentive contributes to the wealth of nations.

What happens after the demand for a fad drops?

Excess supply makes the good easy to obtain.

What happens to the supply curve for a product when the supply goes down?

The supply curve moves to the left.

On which kinds of goods do governments generally place price ceilings?

those that are essential but too expensive for consumers

What does a low price tell suppliers?

Too much of a product is being produced.

Which newspaper headline will most likely shift the demand curve for flu shots to the right?

Health Experts Predict Severe Flu Season Ahead

How did an improvement in the technology for producing digital cameras affect supply?

The supply curve moved to the right.

What happens when a market is in disequilibrium and prices are flexible?

Market forces push toward equilibrium

Why does a government place price ceilings, such as rent control, on some “essential” goods?

to keep the goods from becoming too expensive

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Econ Ch 6: Prices

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Prices

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Questions 27

Answers

1
Which of the following are ways the government controls markets?
subsidies and disequilibrium
shortages and surpluses
equilibrium price and equilibrium point
price ceilings and price floors
2
What does a company generally do when demand for its goods goes up?
It cuts prices.
It raises prices.
There is no set response.
It rations goods.
3
the gov.temporarily froze all wages and prices. This action by the government is an example of
a price ceiling
a price floor.
disequilibrium
rationing
4
What happens to the equilibrium price when supply goes down?
The price goes down.
The price goes up.
The price goes up, and then goes down.
The price stays the same.
5
In response to rising car traffic, demand for bike went up. The new equilibrium point will show
fewer bicycles sold, but at a higher price.
more bicycles sold, but at a higher price.
fewer bicycles sold, but at a higher price.
more bicycles sold, but at a lower price.
6
A shortage will develop when
the quantity of a good that is supplied is greater than all
the government provides subsidies to producers.
the market price is below the equilibrium price.
the discovery of new technology reduces production costs.
7
When is a market at equilibrium?
when unsold goods begin to pile up
when prices equal the cost of production
when suppliers begin to reduce prices
when quantity demanded equals quantity supplied
8
What is the government’s goal in buying excess crops or other agricultural products?
to set legal price ceilings
to keep prices from going down
to lower prices
to raise minimum wage
9
What happens to the price of a good or service when there is excess demand?
The government sets the price.
The price stays the same.
The price goes up.
The price goes down.
10
what happens to the price of a good or service when a shortage of that good or service occurs?
It remains unchanged while quantity demanded drops.
It increases until quantity demanded = quantity supplied.
A price ceiling is imposed,
It decreases until quantity demanded = quantity supplied.
11
How do price changes drive markets toward equilibrium?
They set new price floors and ceilings.
They ensure that prices are fair.
They prevent inflation or deflation.
They increase or decrease supply or demand.
12
What did suppliers do when the supply of digital cameras increased?
Suppliers raised prices on cameras.
Suppliers lowered prices on cameras.
Suppliers could not keep up with demand for cameras.
Suppliers decreased their inventory of digital cameras.
13
If a bakery has a surplus at the end of each day, the owner should
sell only bread.
lower the price of bread.
stop selling bread.
raise the price of bread.
14
How does the free market benefit from the profit incentive?
The profit incentive contributes to the wealth of nations.
The profit incentive leads to rationing.
The profit incentive is a signal to buy more of a good.
The profit incentive promote efficient resource allocation
15
What happens after the demand for a fad drops?
Shortage makes the good difficult to obtain.
The quantity supplied and the price both go up.
The quantity supplied goes down, and the price goes up.
Excess supply makes the good easy to obtain.
16
What happens to the supply curve for a product when the supply goes down?
The demand curve moves to the left.
The demand curve moves to the right.
The supply curve moves to the right.
The supply curve moves to the left.
17
On which kinds of goods do governments generally place price ceilings?
those that are not necessary but have become customary
those cheap but could become more expensive w/out ceiling
those that are essential but too expensive for consumers
those that are essential and cheap
18
During World War II, the United States used rationing to
stop the black market
give away goods
limit production
meet tremendous shortages
19
What does a low price tell suppliers?
Not enough of a product is being produced.
Demand for a product will go up.
Too much of a product is being produced.
Demand for a product will go down.
20
Which newspaper headline will most likely shift the demand curve for flu shots to the right?
Health Experts Predict Severe Flu Season Ahead
New Inhaler Protects Against Flu Without Shot
Contaminated Flu Vaccine Sickens Recipients
c.Suppliers Produce a Surplus of Flu Vaccine
21
How did an improvement in the technology for producing digital cameras affect supply?
The supply curve moved to the left.
The demand curve moved to the left.
The supply curve moved to the right.
The demand curve moved to the right.
22
The price ceiling that was used to control the price of housing was called
rent control
housing control
rent abatement
equilibrium price
23
What happens when a market is in disequilibrium and prices are flexible?
Unsold perishable goods are thrown out.
Sellers waste their resources
Market forces push toward equilibrium
Excess demand is created.
24
How does rationing encourage black markets?
Rationing creates high supply.
Rationing causes criminal behavior.
Rationing creates high demand.
Rationing wrecks the market.
25
What is the government’s goal in buying excess crops or other agricultural products?
to set legal price ceilings
to lower prices
to raise minimum wage
to keep prices from going down
26
What condition is reached when buyers purchase exactly as much as sellers are willing to sell?
price floor
supply and demand
equilibrium
shortage
27
Why does a government place price ceilings, such as rent control, on some “essential” goods?
to keep the goods from becoming too expensive
to keep business people from making large profits
to reduce demand for these goods
to prevent inflation during boom times

Econ Ch 6: Prices Flashcards | StudBud