SuperTeacherTools

Prices Jeopardy Review Answer Key

Play This Game


Chapter 6 Vocabulary
#1 An occurance when quantity supplied is not equal to quantity demanded. Disequilibrium
#2 Surplus Excess supply
#3 A minimum price for a good or service. Price Floor
#4 Excess Demand Shortage
#5 A sudden shortage of a good Supply shock
The Role of Prices
#1 What are the advantages of prices? They provide incentives, are used as signals by consumers and producers, are flexible, free, and diverse.
#2 Although they are a nearly inevitable consequenceof rationing, such trade is illegal and strongly discouraged by governments. The Black Market
#3 What is the alternative to a price-based market? (It is inneficient and difficult to carry out successfully.) Rationing
#4 How do prices in the free market lead to efficient resource allocation? Prices tell producers how much to supply since they are determined in part by consumers. This process leads to efficient allocation of goods because producers will offer goods and services that consumers are willing to purchase.
#5 Suppose that a recent snowstorm has caused a supply shock in the market for suger in the U.S. How would you attempt to solve the problems that follow the storm? a) Voluntary consumer limitation of sugar consumption, rationing, or price hikes by producers
Changes in Market Equilibrium
#1 Name at least three things that can shift the supply curve. Cost of inputs, productivity levels, technology, taxes or subsidies, expectations, government regulations
#2 Name at least three things that can shift a demand curve. income effect, consumer expectations, population, consumer tastes and advertising, prices of related goods (subsitution effect and complements)
#3 When it costs producers less to produce an item than before, this will shift the supply curve which direction? To the right --away from the zero
#4 When prices go down, demand goes where? Up
#5 When you have a fall in supply, the supply curve shifts to the what? What happens to the price and consumer demand? left; goes up, goes down
Combining Supply and Demand
#1 The point on a graph where supply and demand come together is called what? Equilibrium
#2 How is excess demand shown on a graph: above or below the equilibrium pount? below
#3 Markets tend toward equilibrium, but in some cases the government steps in to control prices. What are those two ways? Through price ceilings and price floors
#4 Give an example of a price ceiling. Rent control
#5 Give an example of a price floor. Minimum wage
'The' Test
#1 If you have a surplus, what happens to the price? Goes down
#2 If you have a surplus, what happens to the demand for a product? Decreases
#3 If you have a surplus, what will happen to the supply of this product? Decrease
#4 Another name for the equilibrium point. Market Clearing Price
#5 What does the law of demand state about the relationship between price and quantity supplied? If you have a shortage, there is not enough product to go around. In order to decrease demand and earn more profit, producers will raise prices.
Final Question
How is elasticity of supply measured? Time: How quickly suppliers respond to changes in price.