Chapter 4 - Demand & Supply Analysis

Question 0

an act of trading between individuals in the price system

Answer 0

voluntary exchange

Question 1

economic system in which relative prices are constantly changing to reflect changes in supply and demand

Answer 1

price system/market system

Question 2

all costs associated with exchange

Answer 2

transaction costs

Question 3

reduce transaction costs by providing information to buyers and sellers

Answer 3

middlemen

Question 4

changes in supply and demand create a blank

Answer 4

disequilibrium

Question 5

increase in demand blanks equilibrium price and quantity

Answer 5

increases

Question 6

decrease in demand blanks equilibrium price and quantity

Answer 6

decrease

Question 7

this may take the form of subtle adjustments such as hidden payments, quality changes and may not reach equilibrium right away

Answer 7

price flexibility

Question 8

markets eventually blank but it can happen at different blank due to outside factors like energy shocks, labor strikes, severe weather

Answer 8

adjust, speeds

Question 9

synchronization of decision of buyers and sellers that leads to equilibrium is called the blank

Answer 9

rationing function of prices

Question 10

two methods of non price rationing

Answer 10

wait in line, coupons and random assignment

Question 11

government-mandated minimum or maximum prices

Answer 11

price control

Question 12

a legal maximum price

Answer 12

price ceiling

Question 13

a legal minimum price

Answer 13

price floor

Question 14

all methods used to ration scarce goods that are price controlled

Answer 14

non price rationing devices

Question 15

a market in which price controlled goods are sold at an illegally high price

Answer 15

black market

Question 16

government chooses a price floor for a product and then acts to ensure that the price of the product never falls below the support level

Answer 16

support price

Question 17

a wage floor, legislated by the governemnt, setting the lowest hourly wage rate that firms may legally pay workers

Answer 17

minimum wage

Question 18

some commodities cannot be purchased at all legally; others require a license

Answer 18

government prohibitions and licensing requirements

Question 19

supply restriction that prohibits the importation of more than a specified quantity of a particular good

Answer 19

import quota