Which of the following is not true about prices?

Price systems are difficult to understand.

Which of these would be an example of a surplus?

Stanley produces 1 million cups. Fewer than 1 million Stanley cups are demanded

Ford produces 1 million truck. More than 1 million Ford trucks are demanded.

Apple produces 1 million sets of Airpods. Exactly 1 million sets of Airpods are demanded.

The government sets the target price for sugar lower than the equilibrium price.

What happens to prices when there is a surplus?

Price fluctuates (goes up and then down)

What is the purpose of price supports in agriculture?

To stabilize agricultural prices

To increase competition among farmers

To encourage imports of agricultural products

The government normally uses price ceilings on which kinds of goods/services? (think of the examples used in your notes)

those that are needs but are too high to afford for some people.

Those that are cheap but could become more expensive.

Those that are luxuries but people are used to having.

those that are needs and are cheap

What happens to a market in equilibrium when there is an increase in supply?

Quantity supplied will exceed quantity demanded, so the price will drop

Excess supply means that the price will go up

Quantity demanded will exceed quantity supplied, so the price will drop

A shortage means that the good will become very expensive

In response to increasing costs of mechanical pencils, the demand for wooden pencils has increased. The new equilibrium point for wooden pencils will show...

more wooden pencils sold at a higher price

fewer wooden pencils sold at a higher price

more wooden pencils sold, but at a lower price

fewer wooden pencils sold, but at a lower price

A shortage occurs when

the target price is less than the equilibrium price

the amount of a good supplied is more than the amount demanded

more than the equilibrium quantity of a good is supplied

the government provides subsidies to produce the good

Improvements in technology have reduced the cost to manufacture iPhones, which will increase supply. If demand for iPhones is unchanged, which will be true? note: remember the "equilibrium point" demonstration from class.

more iPhones will be sold at a lower price

more iPhones will be sold at a higher price

fewer iPhones will be sold at a lower price

fewer iPhones will be sold at a higher price

An alternative to prices is rationing. How does rationing work?

The government allows you to purchase a certain amount of the items that the government thinks are necessary

You use money to pay for your goods and services without interference from the government

The government gives you as much as you want of everything

The government lets you choose what is most important for you to receive

On some occasions, rationing has been necessary in the United States. Why?

To ensure that there was enough of a resource during war time and other shortages

To keep sellers from raising prices on necessary goods

Because the Chinese government had also decided to ration supplies

To earn more money to support the military

How do prices lead to an efficient allocation of resources in a free market economy (like the US)?

resources are used in the most productive way according to the needs of consumers and producers

consumers can buy an unlimited amount of any good at whatever price they like

The government decides who controls all of the resources

People who own resources are unable to bargain with buyers

If the demand for Oreo cookies shifts to the left, what will happen to the equilibrium price?

Change in demand is not related to equilibrium price

S24 Chapter 6 Test Prices

Authored by Carolynn Fisher

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31 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The highest legal price that can be charged is the

price

price floor

price ceiling

target price

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

loan that does not carry penalty or does not need to be paid back

USDA loan

nonrecourse loan

secured loan

unsecured loan

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The monetary value of a good or service is the

price

price floor

price ceiling

target price

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The lowest legal price that can be charged is the

price

price floor

price ceiling

target price

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the term for the price ceiling used to control the price of housing?

equilibrium price

rent control

housing assistance

Lending act

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the term for "the smallest amount that can legally be paid to most workers for an hour?

equilibrium price

price floor

minimum wage

supply cost

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Price floor the government sets as a "fair price"

ration

price

target price

equilibrium pice

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S24 Chapter 6 Test Prices

The highest legal price that can be charged is the

loan that does not carry penalty or does not need to be paid back

The monetary value of a good or service is the

The lowest legal price that can be charged is the

What is the term for the price ceiling used to control the price of housing?

What is the term for "the smallest amount that can legally be paid to most workers for an hour?

Price floor the government sets as a "fair price"

price at which the quantity supplied equals the quantity demanded

quantity demanded is greater than the quantity supplied at a given price

quantity supplied is greater than the quantity demanded at a given price

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