Chapter 6 Vocab Flashcards
(16 cards)
The monetary value of a product
Price
Prices serve as “_____”
Signals
______ ______ signal to buyers to buy less and producers to produce more
High prices
_____ ______ signal buyers to buy more and producers to produce less
Low prices
___ help producers and consumers answer the three basic questions of what, how, and for whom to produce
Prices
The price system is an efficient allocator of economic resources because prices are…..
Best way to allocate resources
What happens if we did not have prices?
Rationing would come into play
A system of allocating goods and services without prices in which the government decides everyone’s “fair” share
Rationing
When was rationing Used
WW2
In a market economy, what is the goal of a buyer
Want to find good deals at low prices
In a market economy, name a goal for the seller
Hope for high prices and large profits
How would you know if the price of a product is fair to both the buyer and seller
When the process is both competitive and the transaction is voluntary
When prices are too high you have ____
Surplus
A situation where quantity supplied is greater than quantity demanded at a given price
Surplus
When prices are too low you have a _____
Shortage
A situation where quantity supplied is less then quantity demanded at a given price
Shortage
