1. REVIEW Chapter 6

2. Equilibrium is NOT… A.a point where a good has instability B.a point of balance between price and quantity C.a point on a graph were supply and demand intersect D.all the above

3. Initially a fad can cause… A.excess supply B.excess demand C.surplus D.equilibrium in the market

4. A govt. imposed price ceiling is usually imposed on what type of good? A.those that are good for all people to have B.goods the govt. actually needs for themselves C.essential goods that may be too expensive for some consumers D.all the above

5. Disequilibrium is NOT… A.a point where a good has stability B.a point of imbalance between price and quantity C.a point of excess demand on a graph D.a point of shortage on a graph

6. Why do controlled economies (i.e. Communist) want to control pricing? A.to increase competition B.to keep the markets free C.to create equality D.to create equilibrium

7. What does govt. use other than price control to allocate goods? A.goods allocation B.rationing C.price restraints D.surplus management

8. A.the star is pointing out equilibrium B.the star is pointing out excess demand C.the star is pointing out excess supply D.the star is pointing out shortage Quantity PricePrice

9. Which of these is NOT true concerning “price ceilings”? A.Also called “price control” B.Can cause a shortage in the market C.Used by the government to set a maximum price for a good or service D.Can cause excess supply in the market

10. A govt. imposed price floor is usually imposed on what type of good? A.only expensive goods B.rare goods that are hard to find C.goods the govt. wants for themselves D.those goods that will allow the supplier to make a better profit

11. A.the star is pointing out equilibrium B.the star is pointing out excess demand C.the star is pointing out excess supply D.the star is pointing out surplus Quantity PricePrice

12. A.the graph shows an increase shift in demand B.the graph shows a decrease shift in demand C.the graph shows an increase shift in supply D.the graph shows a decrease shift in supply Quantity PricePrice

13. A.the star is pointing out equilibrium B.the star is pointing out excess demand C.the star is pointing out excess supply D.the star is pointing out shortage and surplus Quantity PricePrice

14. What is the term for the financial and opportunity cost associated with finding a good in shortage? A.shortage costs B.supply cost C.search costs D.spillover costs

15. A.the graph shows an increase shift in demand B.the graph shows a decrease shift in demand C.the graph shows an increase shift in supply D.the graph shows a decrease shift in supply Quantity PricePrice

16. Which of these is NOT true concerning “price floors”? A.Also called “price support” B.Can cause a surplus in the market C.Used by the government to set a minimum price for a good or service D.Can cause excess demand in the market

17. Which of these is NOT a true statement? A.To reduce a surplus, a supplier will reduce the price B.A shift in either supply or demand will cause a shift in equilibrium also C.To reduce a shortage, a supplier will reduce the price D.None of the above

18. A.Equilibrium is $12 P and 2,000 Q B.Equilibrium is $6 P and 2,000 Q C.Equilibrium is $9 P and 3,000 Q D.Equilibrium is $3 P and 1,000 Q

19. A.At $15 the excess supply is 1000 B.At $15 the excess supply is 5000 C.At $15 the excess supply is 4000 D.At $15 the excess supply is 2000