Upgrade to remove ads
Prices and markets
Terms in this set (17)
What factors affect prices?
supply, demand and government intervention
Under what conditions is a market at equilibrium?
When the quantity supplied and the quantity demanded are equal.
Identify two conditions that can lead to disequilibrium in a free market.
When the market price is too high or too low.
when the quantity supplied is too high or too low.
When supply exceeds demand, what happens to prices?
Prices go down
As the price goes down, the demand will increase, pushing the market toward equilibrium.
Identify two ways the government can intervene to control prices.
The government can impose price ceilings (rent control) or price floors (minimum wage).
What is the purpose of minimum wage?
To set a lower limit or price floor for workers wages
In a free market, what impact does a shortage have on consumers?
Consumers may have to wait to purchase an item in stores
In a shortage producers have the opportunity to raise prices or increase production or both to earn more profits
A shortage will cause firms to raise prices.
higher prices cause quantity supplied to rise and quantity demanded to fall until they are equal
surplus will cause firms to lower prices.
lower prices cause quantity demanded to rise and quantity supplied to fall until they are equal
a point at which demand for a product or service is equal to the supply
any price or quantity not at equilibrium, when quantity supplied is not equal to quantity demanded
when quantity supplied is more than quantity demanded
a situation in which want more of a good or service than producers are willing to make available at a certain price
lowest price per hour that a producer can pay a worker. An example of a price floor.
A minimum price for a good or service. Example minimum wage.
A maximum price that can legally be charged for a good or service. Example rent control.
How are prices signals to consumers and producers?
High prices are a signal to producers to supply more of a good to the market and a signal to consumers to demand less of a good. Also, vice versa.
YOU MIGHT ALSO LIKE...
Economics Set Chapter 6
Economics Test: Chapter 6
Ch. 4 Demand, Supply, and Equilibrium
CH 6 Econ
OTHER SETS BY THIS CREATOR
Révision des notions de spé 1ère utiles en spé term
défaillances du marché
Diplôme Emploi Salaire