Chapter 6: Prices

What is the definition of equilibrium in the context of supply and demand?

• The point where the demand curve is above the supply curve

• The point of balance between price and quantity

• The maximum point of the supply curve

• The initial point of the demand curve

What does graphing equilibrium refer to in supply and demand analysis?

• The point where the price is highest

• The point where the quantity supplied is equal to the quantity demanded

• The point where the supply and demand curves meet

• The point where the supply curve is steepest

What occurs when demand exceeds supply?

• Equilibrium is reached

• Surpluses occur

• Shortages occur

• Demand is satisfied

What happens when supply exceeds demand?

• Shortages occur

• Demand is satisfied

• Equilibrium is reached

• Surpluses occur

What happens when supply exceeds demand according to the diagram?

• Prices go up to reach equilibrium

• Prices remain constant

• Prices go down to reach equilibrium

• The market becomes unpredictable

What is the result of a shortage in the market as shown in the diagram?

• Prices go down to reach equilibrium

• Prices go up to reach equilibrium

• Supply exceeds demand

• The market reaches a surplus

Which economic system is characterized by pure competition?

• Communism

• Socialist Leaning Mixed Economies

• Capitalist Leaning Mixed Economies

• Pure Free Market

What type of economic system is associated with communism?

• Pure Free Market

• Capitalist Leaning Mixed Economies

• Pure Planned Economy

• Socialist Leaning Mixed Economies

Which country is listed as an example of a capitalist-leaning mixed economy?

• China

• Venezuela

• France

• United States

What is a price ceiling in the context of government intervention?

• The highest price a consumer is willing to pay

• The minimum legal price for a good or service

• The maximum legal price for a good or service

• A government-imposed limit on the quantity of goods