By McGraw-Hill Education
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Additional resources for Economics: Principles and Practices, Reading Essentials and Study Guide, Workbook
Why or why not? In the last section, you read about how prices are established in the market. In this section, you will read about how the government sometimes sets prices to achieve a social goal. ORGANIZING YOUR THOUGHTS Use the chart below to help you take notes as you read the summaries that follow. Think about the different ways that government has tried to help farmers. Program Description Copyright © by The McGraw-Hill Companies, Inc. Commodity Credit Corporation Federal Agricultural Improvement and Reform Act 52 Study Guide Name Date Class 6, 3 READ TO LEARN • Distorting Market Outcomes (page 151) Prices are sometimes set to achieve social goals.
How does an increase or decrease in price affect how much of a product is bought? • Demand and Marginal Utility (page 93) When a person buys a product, the person thinks about how much use or satisfaction (utility) he or she will get out of it. For example, if you are very thirsty, you might order a cola to ease your thirst. After you drink your cola, your thirst will probably be satisfied and you will not feel the need to drink another one. If you are still thirsty, you might order another one.
This is the point at which marginal cost is equal to marginal revenue. 4. Suppose a business pays its workers a total of $10,000 a year. Last year, the business earned Copyright © by The McGraw-Hill Companies, Inc. $9,765. Has the business reached the break-even point? Explain. Study Guide 45 Name Date Class 6, 1 For use with textbook pages 137–140 P RICES AS SIGNALS KEY TERMS price The monetary value of a product as established by supply and demand (page 137) rationing A system under which an agency such as government decides everyone’s “fair” share (page 139) ration coupon A ticket or receipt that entitles the holder to obtain a certain amount of a product (page 139) rebate A partial refund of the original price of the product (page 140) DRAWING FROM EXPERIENCE When you buy a new shirt or pair of shoes, do you look at the price?