Supply Demand Equilibriumthe point at which quantity demanded

Supply & Demand • Equilibrium-the point at which quantity demanded and quantity supplied are equal.

Disequilibrium • When quantity supplied is not = to quantity demanded.

Supply and Demand Schedule

Excess Demand • When quantity demanded is more than quantity supplied

Price Ceiling • A maximum price that can legally be charged for a good.

Price Floor • A minimum price for a good or service.

Rent Control • A price ceiling placed on rent.

Minimum Wage • A minimum price an employer can pay a worker

Surplus • A situation in which quantity supplied is greater than quantity demanded.

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Change in Demand

The Role of Prices • Items will sell more or less depending on price. • Items will also sell for different prices depending on quality and style. • Check out these examples….

Which shirt costs more and why?

Which store has better quality goods and why?

The Advantages of Prices • • Incentives Signals Flexibility Price system is “free”

Rationing • A system of allocating scarce goods • This was a popular practice during WWI and WWII

The Black Market • A market in which goods are sold illegally

The Wealth of Nations

Spillover Costs • Costs of production that affect people who have no control over how much of a good is produced

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