Economics Chapter 6 Questions

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Equilibrium
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the point at which demand for a product or service is equal to the supply of the product or service.
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disequilibrium
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Any price or quantity not at equilibrium (surplus and shortage)
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shortage
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When quantity demand it is more than quantity supplied
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surplus
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When quantity supplied is more than quantity demanded
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Price ceiling
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A maximum price that can legally be charge for a good or service
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minimum wage
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A minimum price that and employer can pay a worker for one hour of labor
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What factors affect price?
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laws of supply and demand and actions of government
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Example of price ceiling
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rent control
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price floor
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A minimum price set by the government
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what do the minimum wage laws affect?
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The demand and supply of workers
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inventory
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The quantity of goods that a firm has on hand
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fad
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A product that is popular for a short period of time
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search costs
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The financial and opportunity costs that consumers pay when searching for a good or service
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How do changes in supply and demand affect equilibrium?
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they cause prices to go up and down
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An increase in supply shift the supply curve to the _____
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right
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Examples that make the supple curve shift to the left
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1) increase in costs of resources 2) increase in labor costs 3) increase in government regulations
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supply shock
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a sudden shortage of a good
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rationing
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A system of allocating scarce goods and services using criteria other than price
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black market
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A market in which goods are sold illegally without regard for government controls on price quantity

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