chapter+6

Chapter 6.1 notes Questions 1-6
 * equilibrium- the point at which quantity demanded and quantity supplied are equal
 * disequilibrium- describes any price or quantity not at equilibrium when quantity supplied is not equal to quantity demanded in market
 * excess demand- when quantity demanded is more than quantity supplied
 * excess supply- when quantity supplied is more than quantity demanded
 * price ceiling- a maximum price that can be legally charged for a good or service
 * price floor- a minimum price for a good or service
 * rent control- a price ceiling laced on rent
 * minimum wage- a minimum price that an employer can pay a worker for an hour of labor
 * 1) A unique thing about an equilibrium price is its the exact point at which quantity demanded and quantity supplied are equal.
 * 2) The problem of excess demand occurs when quantity demanded is more than quantity supplied. For example if a company only sells a small amount of items but has an order for a lot more then it is excess demand.
 * 3) Price ceiling is the maximum price that can be legally charged for a good service, while price floor is the minimum price for a good or service.
 * 4) Rent control works by having limits on the prices so people wont loose their houses.
 * 5) a) sales and office would have the least amount of change if the price was reduced to $600. b) Two categories that would be affected the worst are management and professional and service. c) Management would loose a ton of money while service would gain money.
 * 6) Price ceiling helps poor people but makes the owners of the house or apartment loose money.

Chapter 6.2 Notes
 * surplus- situation which quantity supplied is greater than the quantity demanded also known as excess supply.
 * shortage- situation in which quantity demanded is greater than quantity supplied, also known as excess demand.
 * search costs- the finical and opportunity costs consumers pay when searching for a good or service.
 * a functioning market will carefully balance supply and demand
 * almost every fall, a trendy toy emerges as one that every child must have. demand for these toys increase.
 * when a supply or demand curve shifts a new equilibrium occurs. the market price and quantity sold move toward the new equilibrium.

Chapter 6.3 notes
 * supply shock- a sudden shortage of a good
 * rationing- a system of allocating scarce goods and services using criteria other than price.
 * black market- a market in which goods are sold illegally
 * spillover costs- costs of production that affect people who have no control over how much of a good is produced
 * the price of water affects how efficiently it is used. when water is provided to farmers at a higher price they have an incentive to irrigate more efficiently
 * the peoples republic of china is moving away from a command economy and rationing to a more market based economy
 * north koreas communist government has built identical apartment blocks for its citizens who do not get to choose where they live
 * drought, floods or frost can kill crops and cause a supply shock

Chapter 6 assessment
 * 1) Equilibrium
 * 2) search costs
 * 3) rationing
 * 4) shortage
 * 5) excess supply
 * 6) supply shock
 * 7) price ceiling
 * 8) Disequilibrium occurs when quantity supplied is not equal to quantity demanded in a market. For example something may need to be a certain price or it wont get the right amount sold or something along the lines of that.
 * 9) The government can set a price ceiling, which is the highest price anyone can pay for an item.
 * 10) A price floor can mean the company making the product does not get enough money and then they wont be in equilibrium.
 * 11) Prices act like a language because that could be the only way companies communicate with each other.
 * 12) To read the demand graph you have to put a point on the spot where the two lines intersect. That is where the equilibrium point is located. The schedule tells you if a product will be in shortage, equilibrium or in excess.
 * 1) To read the demand graph you have to put a point on the spot where the two lines intersect. That is where the equilibrium point is located. The schedule tells you if a product will be in shortage, equilibrium or in excess.