Economics

Mr. Bordelon

The point at which quantity demanded and quantity supplied are equal.

The point at which quantity demanded and quantity supplied are equal.o Equilibrium

Any situation in which quantity supplied exceeds quantity demanded.

Any situation in which quantity supplied exceeds quantity demanded.o Excess supplyo Surplus

Any situation in which quantity demanded exceeds quantity supplied.

Any situation in which quantity demanded exceeds quantity supplied.o Excess demando Shortage

A government-mandated minimum price that must be paid for a good or service.

A government-mandated minimum price that must be paid for a good or service.o Price floor

A government-mandated maximum price that is allowed to be charged for a good or service.

A government-mandated maximum price that is allowed to be charged for a good or service.o Price ceiling

What role does the government play in determining some prices?

What role does the government play in determining some prices?

The government can offer price floors, such as farm subsidies or minimum wage, and price ceilings, such as rent control.

What problem can a price floor cause?

What problem can a price floor cause? Price floors can cause excess supply.

Explain how to interpret the supply and demand graph.o Equilibriumo Demando Supplyo Price and Quantityo Shift of Supply or Demand

Price of a slice

of pizza

Qd Qs

$0.50 300 100

$1.00 250 150

$1.50 200 200

$2.00 150 250

$2.50 100 300

$3.00 50 350

Where is equilibrium? How do you know?

Where is a shortage? How do you know? How much is that shortage?

Where is a surplus? How do you know? How much is that surplus?

Price of a slice

of pizza

Qd Qs

$0.50 300 100

$1.00 250 150

$1.50 200 200

$2.00 150 250

$2.50 100 300

$3.00 50 350

Where is equilibrium? How do you know? $1.50, Qd = Qs.

Where is a shortage? How do you know? How much is that shortage? $0.50 - $1.00, Qd > Qs, 200 ($0.50) or 100 ($1.00)

Where is a surplus? How do you know? How much is that surplus? $2.00 - $3.00, Qs > Qd, 100 ($2.00), 200 ($2.50), or 300 ($3.00)

Why have some cities and towns passed rent control laws? How do these laws affect price equilibrium? What happens when these laws are repealed?

Why have some cities and towns passed rent control laws? How do these laws affect price equilibrium? What happens when these laws are repealed?

Rent control laws are enacted to control inflation of prices and assist lower-income groups. The laws cause disequilibrium, resulting in a shortage. When rent control is repealed, the prices increase to equilibrium, and lower-income residents are forced to leave.

What kind of goods would governments place price ceilings?

What kind of goods would governments place price ceilings?

Essential but generally too expensive.

What happens when we have a minimum wage?

What happens when we have a minimum wage? In theory, businesses would hire fewer workers

because they would have to pay higher than the equilibrium price.

What happens when the supply of a good is greater than the consumer wants to buy, that is, how do we get rid of the surplus?

What happens when the supply of a good is greater than the consumer wants to buy, that is, how do we get rid of the surplus?

Either the good remains unsold or the price drops (the latter more likely).

Technology reduces production costs. If demand remains unchanged, what happens to the product sold? (Hint: Supply increases!)

Technology reduces production costs. If demand remains unchanged, what happens to the product sold? (Hint: Supply increases!)

More goods will be sold at a lower price.

How do you calculate the shortage here?

How do you calculate the shortage here?