Test 5 Supply/Demand/Prices

Question 1

As buyers and sellers interact, the market moves toward market _______.

Answer 1

equilibrium

Question 2

What is the price at which quantity demanded and the quantity supplied are equal?

Answer 2

equilibrium

Question 3

On the graph, the ____ axis shows the various prices at which salads are offered for sale and bought.

Answer 3

vertical

Question 4

The ____________ axis shows the quantity of salads, whether it is the quantity demanded or the quantity supplied.

Answer 4

horizontal

Question 5

What is the result of quantity supplied being greater than quantity demanded?

Answer 5

surplus

Question 6

What is the result of quantity demanded being greater than quantity supplied?

Answer 6

shortage

Question 7

When there is a shortage, producers ______ prices in an attempt to balance quantity supplied and quantity demanded.

Answer 7

raise

Question 8

When there is a surplus, producers ______ prices in an attempt to balance quantity supplied and quantity demanded.

Answer 8

lower

Question 9

What are the 6 factors that can cause a change in demand?

Answer 9

• income
• market size
• consumer taste
• consumer expectations
• substitute goods
• complementary goods

Question 10

What are 6 factors that cause a change in supply?

Answer 10

• input costs
• labor productivity
• technology
• government actions
• producer expectations
• number of producers

Question 11

An increase OR decrease in demand will have a(n) ______ relationship.

Answer 11

direct

Question 12

An increase OR decrease in supply will have a(n) _____ relationship.

Answer 12

inverse

Question 13

If demand decreases, or supply increases, ________.

Answer 13

Equilibrium price falls

Question 14

If demand increases, or supply decreases, ______.

Answer 14

Equilibrium price rises

Question 15

legal maximum price that sellers may charge for a product

Answer 15

price ceiling

Question 16

legal minimum price that buyers must pay for a product

Answer 16

price floor

Question 17

legal minimum amount that an employer must pay for one hour of work

Answer 17

minimum wage

Question 18

system in which the government allocates goods and services using factors other than price

Answer 18

rationing

Question 19

illegal buying or selling in violation of price controls or rationing

Answer 19

black market

Question 20

When does a binding price ceiling occur?

Answer 20

below equilibrium

Question 21

When does a binding price floor occur?

Answer 21

above equilibrium

Question 22

What occurs when producers sell goods and services at prices that balance the twin desires of making the highest profit and luring consumers away from rival producers?

Answer 22

competitive pricing

Question 23

What are the four characteristics of the price system?

Answer 23

1. it is neutral
2. it is market driven
3. it is flexible
4. it is efficient

Question 24

What encourages people to act in certain ways?

Answer 24

incentive

Question 25

For producers, the price system has 2 great advantages:

Answer 25

information

motivation

Question 26

What acts as signals and incentives to consumers?

Answer 26

prices

Question 27

Brand markets rely on ________ _________ that a certain logo is worth a higher price.

Answer 27

consumer perception