Econ Unit One Day 8

Tuesday February 6, 2018 Open your Economics notebooks Shifters of Demand Shifters of Supply Open your Economics notebooks Write the day, date, and the year Create the chart and fill in your answers:

Shifters of Demand Shifters of Supply 1. income 2. preferences 3. Price of related goods 4.Number of buyers 5.Future price 1.Price of resources 2.quotas 3.taxes 4.subsidies 5.weather 6.Future price 7.Number of sellers 8.technology

Final Topic of Unit One: Supply and Demand Together Demand Curve Supply Curve Demand and Supply Together

Moving to Equilibrium Supply and demand work together to determine price. © EMC Publishing, LLC

A surplus occurs when the quantity supplied of a good is greater than the quantity demanded. Surpluses occur only at prices above the equilibrium price. Prices fall when a surplus occurs, because suppliers hope to sell their inventory, or the excess stock of goods that they have on hand.

A shortage occurs when the quantity demanded of a good is greater than the quantity supplied. Shortages occur only at prices below equilibrium price. Prices rise when there is a shortage. Buyers will offer to pay a higher price to get sellers to sell to them rather than to other buyers.

A market is considered to be in equilibrium when the quantity of a good that buyers are willing and able to buy is equal to the quantity that sellers are willing and able to produce and offer for sale.

The equilibrium quantity is the amount of a good that is bought and sold in a market that is in equilibrium. The equilibrium price is the price at which a good is bought and sold in a market that is in equilibrium.

Why Does It Matter If Price Is at Its Equilibrium Level? When price is at its equilibrium level, there are no shortages or surpluses of any goods or services. Buyers are able and willing to buy the amount of the good that sellers are able and willing to sell.

Complete the chart Equilibrium Price Equilibrium Quantity Increase in demand increases decrease in demand decreases Increase in supply decrease in supply

Price Controls Sometimes the government prevents markets from reaching an equilibrium price. It may do so by setting a price ceiling or a price floor.

Price Ceiling A price ceiling is a price that is set lower than the equilibrium price. Buyers and sellers cannot legally buy and sell a good for more than this price. A government may set a price ceiling if it wants to make a good cheaper for consumers to buy.

Price Floor The government can also set a price floor, which is a price that is set above the equilibrium price. Buyers and sellers cannot legally buy and sell a good for less than this price. A government may set a price floor to assist a certain group of producers.

Supply and Demand Test Review You have 10 minutes to work with a partner or group Then it is individual time to work

Vocabulary Review Opportunity Cost Law of Diminishing Marginal Utility Equilibrium Quantity Want Demand Curve Surplus Need Demand Schedule Shortage Trade Off Supply Curve Price Ceiling Incentive Supply Schedule Price Floor Cost-Benefit Analysis Law of Supply Law of Demand Equilibrium Price