Name: _____________________________________
Economics
Date: ________________________________
Chapter 6 – Demand, Supply, and Prices
Guided Questions
Section 1 – Seeking Equilibrium: Demand and Supply
1.
What is market equilibrium?
2.
What is equilibrium price?
3.
What is the difference between quantity supplied and quantity demanded when the price is $10?
(figure 6.1)
4.
What is the difference between quantity supplied and quantity demanded when the price is $2?
(figure 6.1)
5.
How does this market demand and supply schedule illustrate the laws of demand and supply?
(figure 6.1)
6.
What is the quantity supplied at $8? (figure 6.2)
7.
What is the quantity demanded at $8? (figure 6.2)
8.
How do these market demand and supply curves illustrate the concept of equilibrium price?
(figure 6.2)
9.
What is a surplus?
10. When there is a surplus what happens to the prices of goods/services?
11. What do producers do when there is a surplus?
12. What is a shortage?
13. What do producers do when there is a shortage?
14. What is disequilibrium?
15. What happens to quantity demanded at $100 when demand decreases? (figure 6.4 & 6.5)
16. What happens to quantity demanded at $100 when demand increases? (figure 6.4 & 6.5)
17. Does change in demand have a direct or inverse relationship to equilibrium price? Explain your
answer. (figure 6.4 & 6.5)
18. What is the law about equilibrium price when demand and supply change?
Section 2 – Prices as Signals and Incentives
19. What is competitive pricing?
20. How do consumers benefit from competitive pricing?
21. How do producers benefit from competitive pricing?
22. What are the 4 characteristics of the price system?
23. Choose 2 of the characteristics of the price system and explain how each is illustrated through
the example of competitive pricing.
24. What is an incentive?
25. What are the two advantages of the price system for producers?
26. What happens when there is a shortage? What is the signal it sends?
27. What do surpluses mean for consumers?
28. What do high prices signal to consumers?
Section 3 – Intervention in the Price System
29. What is a price ceiling?
30. What is a price floor?
31. What is rationing?
32. What is the black market?
33. Why is a price ceiling set below equilibrium price rather than above it?
34. What negative incentives does rent control pricing give to producers and consumers? (figure
6.12)
35. Why are there price floors?
36. What happens when minimum wage is set above the equilibrium price?
37. What happens when minimum wage is set below the equilibrium price?
38. Why is there a need for rationing resources and products?
39. How does rationing lead to black markets?
40. What is the Office of Price Administration?
41. How does the example of rationing during World War II show that the price system is a more
efficient way to allocate resources?