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maybe I'll pass.

In a free market, the prices are usually the result of competition (tf)

TRUE

Prices serve as a link between the producer and consumer (tf)

TRUE

Prices tend to be in favor of the producer (tf)

FALSE

A market economy adjusts to unexpected events by adjusting consuption and production (tf)

TRUE

In a market economy, a high price is a signal for producers to offer less and consumers to buy more (tf)

FALSE

An advantage of a free market is that the market finds its own equilibrium (tf)

TRUE

Markets are used to "talk" when prices move up or down significantly (tf)

TRUE

In a market economy, a low price is a signal for producers to supply more and consumers to buy less (tf)

FALSE

An advantage of a free market is price flexibility (tf)

TRUE

The adjustment process in a competitive market moves toward the equilibrium (tf)

TRUE

If the demand is unchanged and supply increases, the new equilibrium price will be higher than the old one (tf)

FALSE

If the cost of building materials increases, the supply curve for new homes is likely to shift to the right (tf)

False

The point where the supply curve and the demand curve intersect is called market equilibrium (tf)

TRUE

High prices will result in surpluses (tf)

TRUE

Low prices will result in shortages (tf)

TRUE

A price floor that is set too high will cause a shortage (tf)

FALSE

The minimum wage is an example of a price floor (tf)

TRUE

The minimum wage is an example of a price floor (tf)

TRUE

If a market is at equilibrium, and there is a sudden increase in demand, then

a temporary shortage will occur and the price will rise.

Relatively small changes in supply (both increases and decreases) will have the smallest impact on price when

demand is elastic

What is the equilibrium price in a market?

The price that creates neither a shortage nor a surplus

The adjustment process in a competitive market continually moves toward

equilibrium

Relatively small changes in supply (both increases and decreases) will have the greatest impact on prices

demand is inelastic

What happens when wages are set above the equilibrium level by law?

Firms employ fewer workers than they would at the equilibrium wage

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

those that are essential but too expensive for some consumers

When buyers will purchase exactly as much as sellers are willing to sell, what is the condition that has been reached?

equilibrium

Which of the following is an example of a good whose price goes down because of improvements in technology?

computer printers

What happens when the supply of a nonperishable good is greater than the consumer wants to buy?

the good becomes a luxury and the price rises

Which of the following is a situation that makes the market behave inefficiently?

when consumers do not have enough information to make good choices

What happens to a market in equilibrium when there is an increase in supply?

Quantity supplied will exceed quantity demanded, so the price will drop

What is the name of the smallest amount that can legally be paid to most workers for an hour of work?

minimum wage

The price ceiling that was used to control the price of housing in New York City and other cities was called which of the following?

rent control

According to Figure 6.2, in this market, a price of $1.50 would be

equilibrium

According to Figure 6.2, at the equilibrium price, how many slices of pizza will be sold?

200

The price of a slice of pizza is $2.50. At the end of the day, how many unsold slices of pizza will be left, according to Figure 6.2?

200

If the government set a price of $2.00 a slice, how many slices of pizza will be sold each day, according to Figure 6.2?

150

a sudden lack of goods

supply shock

the smallest amount, by law, that can be paid to a worker for an hour of labor

minimum wage

a price ceiling placed on the amount people pay for housing

rent control

a maximum amount that can be legally charged for a good or service

price ceiling

when quantity supplied is more than quantity demanded

excess supply

when quantity supplied and quantity demanded are not the same in a market

disequilibrium

situation in which quantity demanded is greater than quantity supplied

shortage

the financial and opportunity costs consumers pay when looking for a good or service

search costs

when quantity demanded is more than quantity supplied

excess demand

a sudden lack of availability of a good

supply shock

a system of allocating scarce goods and services using some criteria other than price

rationing

costs of production that affect people who have no control over how much of a good is produced

spillover costs

situation in which quantity supplied is greater than quantity demanded

surplus

the financial and opportunity costs consumers pay when looking for a good or service

search costs

a minimum price for a good or service

price floor

the point at which quantity supplied and quantity demanded are the same

equilibrium

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