Test 5 Supply/Demand/Prices Flashcards
As buyers and sellers interact, the market moves toward market _______.
equilibrium
What is the price at which quantity demanded and the quantity supplied are equal?
equilibrium
On the graph, the ____ axis shows the various prices at which salads are offered for sale and bought.
vertical
The ____________ axis shows the quantity of salads, whether it is the quantity demanded or the quantity supplied.
horizontal
What is the result of quantity supplied being greater than quantity demanded?
surplus
What is the result of quantity demanded being greater than quantity supplied?
shortage
When there is a shortage, producers ______ prices in an attempt to balance quantity supplied and quantity demanded.
raise
When there is a surplus, producers ______ prices in an attempt to balance quantity supplied and quantity demanded.
lower
What are the 6 factors that can cause a change in demand?
- income
- market size
- consumer taste
- consumer expectations
- substitute goods
- complementary goods
What are 6 factors that cause a change in supply?
- input costs
- labor productivity
- technology
- government actions
- producer expectations
- number of producers
An increase OR decrease in demand will have a(n) ______ relationship.
direct
An increase OR decrease in supply will have a(n) _____ relationship.
inverse
If demand decreases, or supply increases, ________.
Equilibrium price falls
If demand increases, or supply decreases, ______.
Equilibrium price rises
legal maximum price that sellers may charge for a product
price ceiling
legal minimum price that buyers must pay for a product
price floor
legal minimum amount that an employer must pay for one hour of work
minimum wage
system in which the government allocates goods and services using factors other than price
rationing
illegal buying or selling in violation of price controls or rationing
black market
When does a binding price ceiling occur?
below equilibrium
When does a binding price floor occur?
above equilibrium
What occurs when producers sell goods and services at prices that balance the twin desires of making the highest profit and luring consumers away from rival producers?
competitive pricing
What are the four characteristics of the price system?
- it is neutral
- it is market driven
- it is flexible
- it is efficient
What encourages people to act in certain ways?
incentive
