Chapter 6
Section 1: Price
as signals
Main Idea: Competitive
markets and prices are
important to capitalism
Vocabulary
 Price
 Rationing
 Ration
 rebate
coupon
Notes
 What
do high prices signal?
 What do low prices signal?
 What advantages to prices have?
 How does rationing work?
 What problems do nonprice allocation
systems face?
Chapter 6
Section 2: The
price system at
work
Main Idea: Changes in
demand and supply cause
changes in price.
Vocabulary
 Economic
model
 Market equilibrium
 Surplus
 Shortage
 Equilibrium price
Notes






What do supply and demand curve models
help economists examine?
How are prices established in a competitive
market?
What creates a surplus?
What creates a shortage?
What is the relationship between the elasticity
of supply and demand curves and price?
What is the theory of competitive pricing?
Chapter 6
Section 3:
Social Goals vs.
Market
Efficiency
Main Idea: To achieve
goals, government
sometimes sets prices
vocabulary
 Price
ceiling
 Minimum wage
 Price floor
 Target price
 Nonrecourse loan
 Deficiency payment
Notes
 Why
does the government fix prices?
 If the price ceiling is below the equilibrium
price, will a shortage or surplus occur?
 When were agricultural price supports
introduced?
 What did a nonrecourse loan allow
farmers to do?
 How did deficiency payments help
farmers?