ECONOMICSREADING GUIDECHAPTER 6

NAME:______

Using Chapter 6 in your textbook, answer the following questions.

  1. What happens at the point where buyers and sellers agree? Use these terms in your answer: market equilibrium, equilibrium price, equilibrium quantity.
  1. Why do competitive markets move toward equilibrium?
  1. Explain what happens when prices are set too low.
  1. Explain what happens when prices are set too high.
  1. Complete the following table about the two types of price controls discussed in Section 6

Price Control / Why Enacted / Examples / Economic Result
  1. Choose a product that interests you. Then create a newspaper headline announcing an event that would result in a shift in demand or supply (example to the right).
  2. Complete the given graph to show the shift in the demand or supply curve and the change in equilibrium price and quantity.
  3. Write what happens to the equilibrium price and equilibrium quantity as a result of the shift.
  1. Product:
  2. Headline:
  3. Which curve shifted (Supply or Demand)?
  4. Which way did the curve shift?
  5. What caused the curve to shift (which TRIBE or ROTTEN factor)?
  6. What happened to Equilibrium Price?
  7. What happened to Equilibrium Quantity?

NAME:______

Using Chapter 6 in your textbook, answer the following questions.

  1. What happens at the point where buyers and sellers agree? Use these terms in your answer: market equilibrium, equilibrium price, equilibrium quantity.

We call the point where the supply and demand curves meet market equilibrium. This is the point where amount producers are willing and able to sell meets the point where buyers are willing and able to buy. This point shows our equilibrium quantity (value on the x-axis) and equilibrium price (value on the y-axis).

  1. Why do competitive markets move toward equilibrium?

Money! If producers set prices too high or too low they get less money. Prices being set too low means they sell out and could have charged more for their product. Prices set too high means they have a surplus of goods they paid to make but don’t get money from.

  1. Explain what happens when prices are set too low.

When prices are too low there is a SHORTAGE where the quantity consumers are willing and able to buy is greater than the quantity producers are willing and able to sell. More people want to buy the good than product available.

  1. Explain what happens when prices are set too high.

When prices are too high there is a SURPLUS where the quantity producers are willing and able to supply is greater than the quantity demanded. More product is available than people are willing and able to buy at that price.

  1. Complete the following table about the two types of price controls discussed in Section 6

Price Control / Why Enacted / Examples / Economic Result
PRICE FLOOR / Stop prices from going too LOW. / Farmers, minimum wage / EXCESS SUPPLY
PRICE CEILING / Stop prices from going to HIGH. / Rent control / SHORTAGE
  1. Choose a product that interests you. Then create a newspaper headline announcing an event that would result in a shift in demand or supply (example to the right).
  2. Complete the given graph to show the shift in the demand or supply curve and the change in equilibrium price and quantity.
  3. Write what happens to the equilibrium price and equilibrium quantity as a result of the shift.
  1. Product:
  2. Headline:
  3. Which curve shifted (Supply or Demand)?
  4. Which way did the curve shift?
  5. What caused the curve to shift (which TRIBE or ROTTEN factor)?
  6. What happened to Equilibrium Price?
  7. What happened to Equilibrium Quantity?