An occurance when quantity supplied is not equal to quantity demanded.
Surplus
A minimum price for a good or service.
Excess Demand
A sudden shortage of a good
What are the advantages of prices?
Although they are a nearly inevitable consequenceof rationing, such trade is illegal and strongly discouraged by governments.
What is the alternative to a price-based market? (It is inneficient and difficult to carry out successfully.)
How do prices in the free market lead to efficient resource allocation?
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?
Name at least three things that can shift the supply curve.
Name at least three things that can shift a demand curve.
When it costs producers less to produce an item than before, this will shift the supply curve which direction?
When prices go down, demand goes where?
When you have a fall in supply, the supply curve shifts to the what? What happens to the price and consumer demand?
The point on a graph where supply and demand come together is called what?
How is excess demand shown on a graph: above or below the equilibrium pount?
Markets tend toward equilibrium, but in some cases the government steps in to control prices. What are those two ways?
Give an example of a price ceiling.
Give an example of a price floor.
If you have a surplus, what happens to the price?
If you have a surplus, what happens to the demand for a product?
If you have a surplus, what will happen to the supply of this product?
Another name for the equilibrium point.
What does the law of demand state about the relationship between price and quantity supplied?
Disequilibrium
Excess supply
Price Floor
Shortage
Supply shock
They provide incentives, are used as signals by consumers and producers, are flexible, free, and diverse.
The Black Market
Rationing
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.
a) Voluntary consumer limitation of sugar consumption, rationing, or price hikes by producers
Cost of inputs, productivity levels, technology, taxes or subsidies, expectations, government regulations
income effect, consumer expectations, population, consumer tastes and advertising, prices of related goods (subsitution effect and complements)
To the right --away from the zero
Up
left; goes up, goes down
Equilibrium
below
Through price ceilings and price floors
Rent control
Minimum wage
Goes down
Decreases
Decrease
Market Clearing Price
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.
