Review Unit 3 Concept 2

In some limited circumstances, governments or producers will choose to set a market price rather than allow the forces of supply and demand to determine the market price.

• True
• False

A _________ _____________ is a minimum legal price set above the equilibrium price.

• price floor
• market price
• price ceiling
• sale price

A ________________ ______________________ is a maximum legal price set below the equilibrium price.

• price floor
• market price
• price ceiling
• sale price

Since price floors are above equilibrium, there will be a larger quantity supplied than there is a quantity demanded, resulting in a __________.

• shortage
• surplus
• disequilibrium

Since price ceilings are below equilibrium, there will be a larger quantity demanded than there is a quantity supplied, resulting in a _____________.

• shortage
• surplus
• disequilibrium

If a price floor were set below equilibrium, or a price ceiling were set above equilibrium, they would be non-binding and have no effect on the market price.

• True
• False

________________________ are firms legally owned by two or more people.

• sole proprietorship
• partnership
• corporation

____________________________ are firms legally owned by only one person.

• sole proprietorship
• partnership
• corporation

______________________ are firms legally owned by stockholders who have purchased “shares” of the company.

• sole proprietorship
• partnership
• corporation

In a public corporation, shares are also called _____________ and can be purchased or sold on an exchange.

• dividends
• bonds
• stocks
• taxes