Chapter 6 (1) Combining Supply and Demand
1. Define
equilibrium
disequilibrium
price ceiling
price floor
2. Read Fast fact (127) Why was there an excess supply of hotel rooms in December 1999? ______________________________________________________________________
3. Draw a Graph and show where excess supply and excess demand appear. (fig.6-2, 127)
Read Are Baseball Players paid too much? (121)
4. How do the laws of supply and demand affect baseball players' salaries?
6-2 Changes in Market Equilibrium (133-137 ) Define
surplus-
shortage
search costs
2. Why is the picture with toys on page 136?
3. Answer question 3 on page 137. Graph each of the following on equilibrium price
a. an outbreak of food poisoning is trace to eggs
b. a new breed of chicken is developed that lays twice as many eggs
c. Oprah convices her audience to eat more eggs
4. Read the story of Michael Dell (138)
a. Where did Dell start his p.c. business?
b. Why did Dell focus on direct sales to customers in the early 2000's?
6-3 The Role of Prices (139- ) Define
supply shock
rationing
black market
spillover costs
1. Look at the picture on page 140. What 3 events can cause a crop supply shock?
2. Look at the picture on 141. How did the government deal with shortages in WWII?
3. Read Global connections (143) Why does Cuba have two diffeent systems for distributing goods?
4. Look at the picture on 144. How do prices improve efficiency?
5. Read the real life Case Study (145)
Why did Ty Warner stick to the original price of $4.99 on Beanie Babies? He could have charged much more. How did he create scarity of Beanie Babies?
