Economics Chapter 6 Vocabulary Answers

question

Market Equilibrium
answer

Situation in which the quantity demanded of a good/service at a particular price is equal to the quantity supplied at that price
question

Equilibrium Price
answer

Price at which the quantity of a product demanded by consumers and the quantity supplied by producers are equal
question

Surplus
answer

Result of quantity supplied being greater than quantity demanded, usually because prices are too high
question

Shortage
answer

Result of quantity demanded being greater than quantity supplied, usually because prices are too low
question

Disequilibrium
answer

Situation that occurs when there is an imbalance between quantity demanded and quantity supplied
question

Competitive Pricing
answer

Term describing when producers sell goods/services at prices that best balance the twin desires of making the highest profit and luring customers away from rival producers
question

Incentive
answer

A way to encourage people to take a certain action
question

Price Ceiling
answer

An established maximum price that sellers may charge for a good/service
question

Price Floor
answer

An established minimum price that buyers must pay for a good/service
question

Minimum Wage
answer

Minimum legal price that an employer may pay a worker for one hour of work
question

Rationing
answer

System in which the government allocates goods/services using factors other than price
question

Black Market
answer

Term describing where goods/services are illegally bought and sold in violation of price controls or rationing
question

Demand
answer

Willingness to buy a good/service and the ability to pay for it
question

Law of Demand
answer

When prices go down, quantity demanded increases. When prices go up, quantity demanded decreases.
question

Supply
answer

Willingness and ability of producers to offer goods/services for sale
question

Law of Supply
answer

Law that states that producers are willing to sell more of a good/service at a higher price than they are at a lower price
question

Elastic
answer

Term describing demand when the quantity demanded changes significantly as price changes
question

Inelastic
answer

Term describing demand when the quantity demanded changes little as price changes
question

Unit Elastic
answer

Term describing demand when the percentage change in price and quantity demanded are the same
question

Regulation
answer

The act of controlling business behavior through a set of rules/laws

Get instant access to
all materials

Become a Member