Price system

Price system

(This is a lengthy lesson compared to previous ones)

Open Ended

In your own words, define "intersection"

For economics, when we put supply and demand on a graph together, they have to INTERSECT somewhere.

Open Ended

Where the S and D curves intersect is called __________

Open Ended

On the schedule on the previous slide, where would supply and demand meet? At what price point and at what quantity?

Open Ended

What does EP and EQ stand for?

Open Ended

What kind of economy do we have in the US?

Open Ended

Prices act as _____ telling us to change supply or demand.

Open Ended

What is 1 advantage of price?

Open Ended

What is 1 disadvantage of price?

Open Ended

The market is always seeking ________

Open Ended

Tell me again what equilibrium means in an economic market?

Multiple Choice

When the market is NOT at equilibrium, what do we get?

• shortage and surplus

• balance

• cost of production

Open Ended

In your words, what is a shortage?

In your words, what is a surplus?

On the graph, the line is ABOVE equilibrium (the intersection)

above equilibrium is SURPLUS

So if we want to BRING DOWN the line, we BRING DOWN the price.

Notice that when we bring the line down, we are closer to equilibrium. go back and study that graph again...

On the graph, the line is BELOW equilibrium (the intersection)

Below equilibrium is a SHORTAGE

If we want to BRING UP the supply, we need to BRING UP the price.

Open Ended

What are 2 ways that the government influences equilibrium?

SLOW DOWN!

A ceiling is the highest price

A floor is the lowest price.

BUT, on a graph, it seems confusing if you don't THINK IT THROUGH

Open Ended

What is a real life example of a price ceiling?

Open Ended

What is a real life example of a price floor?

On a graph, a CEILING and a FLOOR are upside down logically.

The floor price is at the top and

The ceiling price is at the bottom.