1 Make a new Table of Contents What will we learn today? What will we learn today? Understand the process by which competition among buyers and sellers determines a market price Describe the effect of price controls on buyers and sellers. Unit: Prices Day 4 Directions: On Day 4 of your Bellwork, answer the following question. You need to write a one paragraph response, so fill out all of Day 4. There should be little to no talking during the Bellwork. Watch this clip from The Hudsucker Proxy (1:03:00). Describe what you saw using at least three econ terms.

Assignment 1: 6.1 Combining Supply and Demand Notes 2 We’ve learned about supply and demand. Now, let’s put the concepts together!

I. Balancing the Market Equilibrium: the point at which quantity demanded and quantity supplied are equal. 3 BrainPop:

II. Disequilibrium Disequilibrium: any price or quantity not at equilibrium Excess demand: when quantity demanded is more than quantity supplied example: when something sells out quickly (like digital cameras on Black Friday), there is excess demand. Excess supply: when the quantity supplied is more than the quantity demanded example: if hamburgers cost $20, not all of them would sell and there would be a lot of leftovers. 4

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III. Government Intervention Sometimes government can create a price ceiling, or a maximum price that can be legally charged for a good or service. One example is rent control, a price ceiling placed on rent. In New York City, rent was being raised like crazy, so the government started rent control to keep the prices from getting out of control. 6 Is rent control a good thing or a bad thing?

Bad parts of rent control: Rent control makes apartments so cheap that there is excess demand. They don’t have enough apartments to met demand. Rent control reduces the quality of housing (more slums). Landlords know they can’t make much money, so they don’t take care of the maintenance. Because many apartment buildings aren’t making money, they get converted to offices. Economists argue that rent controls do more bad than good. 7

IV. Price Floors Price floor: a minimum price for a good or service example: minimum wage, a minimum price that an employer can pay a worker for an hour of labor. 8

Assignment 2: pg. 131,

1. What is unique about equilibrium price? 10

1. What is unique about equilibrium price? Equilibrium price is unique because it is the point where price and amount supplied are equal. 11

2. What situation can lead to excess demand? 12

2. What situation can lead to excess demand? When quantity demanded is higher than quantity supplied. This can happen at Christmas when there are Black Friday sales. 13

3. How is a price floor different from a price ceiling? 14

3. How is a price floor different from a price ceiling? A price floor is a gov. set minimum price for certain goods or services (like minimum wage). A price ceiling is a gov. set maximum for goods and services (like rent control). 15

4. How does rent control work? 16

4. How does rent control work? Gov. places a max price on rent so that poor families can afford to live in the city. 17

5. pg. 536 Minimum wage goes up to $600 per week. What category of jobs is unaffected by an increase in minimum wage? What two categories are most affected? What will happen? 18

5. pg. 536 Minimum wage goes up to $600 per week. What category of jobs is unaffected by an increase in minimum wage? What two categories are most affected? What will happen? A. Least affected: management and professional B. Most affected: service, transportation C. Wages will increase, some workers will lose jobs. 19

6. What are the benefits and drawbacks of a price ceiling? 20

6. What are the benefits and drawbacks of a price ceiling? Poor people can afford things, but supply and quality decreases. 21

Label: price floor, supply curve, equilibrium point, disequilibrium point, demand curve, price ceiling 22

Label: price floor, supply curve, equilibrium point, disequilibrium point, demand curve, price ceiling A. Disequilibrium point B. Disequilibrium point C. Supply curve D. Price floor E. Price ceiling F. Demand curve 23

6.3 The Role of Prices Jigsaw You will be working with your group to create a poster about the contents of 6.3 The Role of Prices Your final poster will contain information about all of 6.3, but for now you will each be assigned a different learning task. For the next 30 minutes, you will work quietly to get notes about your specific section. Then you will teach each other what you’ve learned, and create one group poster. You should know your poster info well enough to present it and pass a quiz on it. 24

Homework Assignment 3: Cars Think of three (reasonable) cars you would like to buy that would be $10,000 (used) or under for the next class. 25