Name __________________________
Quiz Date / due date ______________
Prices
Principles and Practices of Economics
Chapter 6 Study Guide
Directions: Referring to your text, read pages 124-146, and answer the following
questions. Use this as a reference when studying for the chapter quiz, and be prepared to
turn it in for credit prior to taking the quiz.
1. The point at which quantity demanded and quantity supplied are equal is known as
______________________. This is also known as the market clearing price.
2. What is the term describing when the market price or quantity supplied is anywhere
but at the point of equilibrium? ____________________________
3. What can the result of disequilibrium be? ______________ demand or
____________ supply
4. When quantity demanded is more than the quantity supplied, it is known as excess
__________________. This is when a shortage will occur.
5. What group of people do low prices encourage? _____________________
6. What group of people do low prices discourage? ______________________
7. When quantity supplied is more than the quantity demanded, it is known as excess
__________________. This is when a surplus will occur.
8. Whenever the market is in disequilibrium and prices are flexible, what will market
forces do? _________________________________________ What do you think
that means?
____
9. When the government sets a maximum price that can be legally charged for a good it
is known as a ________________ ____________________. An example of this
would be ________________________
10. When the government sets a minimum price that can be legally charged for a good it
is known as a ________________ ____________________. An example of this
would be ________________________
11. Can individual states in the U.S. set a minimum wage that is higher than the
minimum wage set by the federal government? ____________
12. Can individual states in the U.S. set a minimum wage that is lower than the minimum
wage set by the federal government? ____________
Section 2
13. What are two factors that can push prices into a state of disequilibrium?
a. _____________________________________
b. _____________________________________
14. When the quantity supplied exceeds the quantity demanded at a given price,
economists call this a ________________. (also known as excess supply)
15. Is the equilibrium price typically an unchanging, singe point on a graph? _______
16. When the quantity demanded exceeds the quantity supplied at a given price,
economists call this a ________________. (also known as excess demand)
Section 3
17. Prices provide a _______________________ for buyers and sellers.
18. A relatively high price tells producers what? _______________________________
19. A relatively low price tells producers what? _______________________________
20. A sudden shortage of a good is known as _________________ ______________.
21. A system to allocate scarce resources and services using criteria other than price is
known as __________________.
22. What is the quickest way to resolve excess demand? __________________________
23. What is a major benefit of a price-driven economy?
24. Efficient resource allocation means that economic resources (the factors of
production) will be used for what? ________________________________________
25. If only a few firms are selling a product there might not be enough competition
among the sellers to lower the market price down to the equilibrium. This is known
as what kind of competition? __________________________
26. Read the chapter summary on page 146 carefully.
27. Answer items 1-7 from the Key Terms activity on page 146, by writing the correct
matching term in the appropriate blanks below.
1. ___________________________________
2. ___________________________________
3. ___________________________________
4. ___________________________________
5. ___________________________________
6. ___________________________________
7. ___________________________________