Ch.+6+Review

Pg 146 #1-7, 9-16

1. Equilibrium 2. Search costs 3. Rationing 4. Supply shock 5. Excess supply 6. Excess demand 7. Price floor 9. A price floor would cause a surplus and a Price ceiling will cause a shortage 10. The governments role in prices is that they instate a price ceiling and a price floor 11. A price floor could cause a surplus 12. Prices act as a language because they communicate the cost of goods and services, which allows people to talk by buying items. 13. 14. Rent control is passed as a law by some cities and towns because they want to make sure that the thriving population can live there and work there, so it's not a city that only the rich could live in. These laws affect price equilibrium making sure that the people who work in that city can also live in it. If these laws are removed, prices would rise and people who used to be able to afford living there is not able to anymore so they move out to some where more affordable 15. Computers lower search costs becausei you can easily search for products on a computer instead of hiring someone to do that for you. This would reduce the price of goods because the price of production would decrease 16. Prices lead to efficient resource allocation by allowing those who need or want a good the most to be able to get it and prevent people from getting goods that they don't need