Equilibrium and Price Controls

What is equilibrium in a market?

• The point where quantity supplied equals quantity demanded

• The point where supply exceeds demand

• The point where demand exceeds supply

• The point where prices are fixed

What happens when a market is in disequilibrium?

• Shortage or surplus occurs

• Equilibrium is achieved

• Prices remain constant

• Demand and supply are equal

What causes a shortage in a market?

• Price below equilibrium price

• Price above equilibrium price

• Equal supply and demand

• Government intervention

What is the result of a surplus in a market?

• Excess supply

• Excess demand

• Equilibrium

• Government intervention

Why do businesses raise prices during a shortage?

• To stop shortages

• To create surplus

• To achieve disequilibrium

• To increase demand

What is a price ceiling?

• Maximum price set by the government

• Minimum price set by the government

• Equilibrium price

• Price determined by businesses

What happens when a price ceiling is lower than the equilibrium price?

• A shortage occurs

• A surplus occurs

• Equilibrium is achieved

• Prices remain constant

Why do governments set price ceilings?

• To control prices in a market

• To create surplus

• To achieve equilibrium

• To increase demand

What is a price floor?

• Lowest price set by the government

• Highest price set by the government

• Equilibrium price

• Price determined by businesses

What is an example of a price floor?

• Minimum wage

• Rent control

• Equilibrium price

• Price ceiling