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P R I C E S

This comprehensive review explores key concepts in economics related to market equilibrium, surplus, shortage, and price controls. It delves into various situations including excess supply and demand, impacts of price ceilings and floors, and mechanisms such as rationing and black markets. Learn about government intervention in markets, the effects of supply and demand shifts, and the significance of consumer and producer surplus. Understand how price supports, taxes, and market controls affect both equilibrium price and quantity, providing a deeper insight into economic principles.

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P R I C E S

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  1. P R I C E S Unit Review

  2. P R I C E S • What is a situation in which quantity supplied is greater than quantity demanded? It is also known as excess supply. Shortage Surplus Equilibrium

  3. P R I C E S • Surplus

  4. P R I C E S What is a situation in which quantity demanded is greater than quantity supplied? Also known as excess demand. Shortage Surplus Equilibrium

  5. P R I C E S • Shortage

  6. P R I C E S • What is a system of allocating scarce goods and services using criteria other than price? Supply Shock Rationing Black market

  7. P R I C E S • Rationing

  8. P R I C E S • What is a market in which goods are sold illegally? Supply Shock Rationing Black Market

  9. P R I C E S • Black Market

  10. P R I C E S • What is a state of balance? Where Quantity Demanded equals Quantity Supplied. Shortage Surplus Equilibrium

  11. P R I C E S • Equilibrium

  12. P R I C E S • What is it called when the government or some outside force sets the market price at a level other than market equilibrium? Price Ceiling Price Floor Price Control

  13. P R I C E S • Price Control

  14. P R I C E S • What is it called when a government regulation is established that prevents prices from rising above a certain level? Price Ceiling Price Floor Price Control

  15. P R I C E S • Price Ceiling

  16. P R I C E S • What is it called when a government regulation is established that prevents prices from falling below a certain level? Price Ceiling Price Floor Price Control

  17. P R I C E S • Price Floor

  18. P R I C E S Which one can lead to a shortage in the market? Price Floor Price Ceiling Which one can lead to a surplus in the market? Price Floor Price Ceiling

  19. P R I C E S Question # 1 • It is a Price Ceiling Question # 2 - It is a Price Floor

  20. P R I C E S • What type of price control is an example of the minimum wage laws? • Price Floor Price Ceiling • What type of price control is an example of the New York City Rent Controls? • Price Floor Price Ceiling

  21. P R I C E S • Question # 1 • Price Floor • Question # 2 • Price Ceiling

  22. P R I C E S • What is a government restriction that is placed on a product that will keep prices from increasing? Price Support Price Freeze

  23. P R I C E S Price Freeze

  24. P R I C E S • What is a government subsidy of an industry to help the market? Price Support Price Freeze

  25. P R I C E S • Price Support

  26. P R I C E S • What industry is the most common of all price supports?

  27. P R I C E S • Agriculture

  28. P R I C E S • How does the “Target Price” system work in a price support by the government?

  29. P R I C E S • The government sets a price for the grain ($ 4.00/bushel). Farmer grows the grain and sells it on the open market (say 20,000 bushels). Say the farmer receives $ 3.00/bu. He would make $ 60,000 for his crop. He then submits to the government for the addition $20,000 that they owe him. He makes $ 80,000 for his work that year.

  30. P R I C E S • What happens to the Equilibrium Price and Quantity if the Supply Curve moves to the RIGHT?

  31. P R I C E S • EP would Decrease and EQ would Increase. EP and EQ would move in the opposite direction.

  32. P R I C E S • What happens to the Equilibrium Price and Quantity if the Supply Curve moves to the LEFT?

  33. P R I C E S • EP would Increase and EAQ would Decrease.

  34. P R I C E S • What happens to the Equilibrium Price and Quantity if the Demand Curve moves to the LEFT?

  35. P R I C E S • EP would Decrease and EQ would Decrease. Both EP and EQ would move in the same direction

  36. P R I C E S • What happens to the Equilibrium Price and Quantity if the Demand Curve moves to the RIGHT?

  37. P R I C E S • EP would Increase and EQ would Increase.

  38. P R I C E S • What is a Incidence of Tax (or Tax Incidence)?

  39. P R I C E S • That is who really pays for the tax that is added to the product during the process of making that unit.

  40. P R I C E S • What happens to the Supply Curve if a tax is added to the production process of a product?

  41. P R I C E S • The Supply Curve would move to the LEFT. It will cost that company more money to produce each unit and thus will have less units they can make.

  42. P R I C E S • What is it called when a consumer goes to the store to buy a product and has a budget, but does not have to spend the whole budget on that product? • Consumer Surplus • Producer Surplus

  43. P R I C E S • Consumer Surplus

  44. P R I C E S • What is called when as a producer you receive more money for your product that you expected to receive? • Consumer Surplus • Producer Surplus

  45. P R I C E S • Producer Surplus

  46. P R I C E S • Draw a Demand Curve for something that is inelastic like Insulin. • Draw a Demand Curve for something that is elastic like Garden Vegetables. • Draw a Supply Curve for something that has natural restriction on it like oranges. • Draw a Supply Curve for something that has no natural restriction on it like personal computers.

  47. P R I C E S • What are the FIVE advantages of Prices?

  48. P R I C E S • They are Neutral, Flexible, Freedom of Choice, No Administrative Costs, and Efficient

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