Bell Ringer #10 – 10/25/10 1. What economic conditions create a “shortage”? 2. What occurs when the quantity supplied exceeds the demand for a good? 3. Define “productivity”.

Managing Prices To protect consumers & producers from dramatic price swings, governments often sets prices. Price Ceiling – establishes a maximum price for a particular good. Ex: rent control for apartments. Price Floor – establishes a minimum price. Ex: base price for corn should guarantee some income for farmers.

Minimum Wage By federal law, minimum wage is the lowest amount an employer legally can pay a worker for a job. Sometimes the # of workers exceeds the # of available jobs. This creates competition and workers are more willing to take a lower wage. Fed Min Wage = $7.25 Illinois Min Wage = $8.25

Homework Read Ch 5, Sn 3 – “Managing Prices” Answer questions 1 & 3 on page 112. Due on Wednesday