Economics Chapter 6 GRQs

Guided Reading Questions:  Chapter 6                           

Section 1 Combining Supply and Demand

1.       In a free market, what impact does a shortage have on consumers? How does this differ from the effect on producers?

2.       What is equilibrium?  Create a supply and demand curve to demonstrate where equilibrium is located.

3.       What action will a producer usually take when the price they can charge is higher than the equilibrium price?  How does a products shelf life or durability influence the decisions of producers?

4.       Make a list of pros and cons for rent control.

5.       Do the same for minimum wage.

Section 2 Changes in Market Equilibrium

1.       Explain why equilibrium is a “moving target”.

2.       What are the signs of a shortage in a market?  What signs indicate that a market has a surplus?

Section 3 The Role of Prices

1.       Give four examples of the advantages of prices.

2.       Why do buyers and sellers conduct business on the black market?

3.       Why is the price system an efficient way to allocate resources?

4.       What was Adam Smith’s argument in “wealth of nations”?