1. Graphing Supply and Demand
SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits work to determine production and distribution in a market economy.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.
SSEMI3 The student will explain how markets, prices, and competition influence economic behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create shortages.

2. Equilibrium Price and Quantity
Located at the intersection of supply and demand
Also called Market Clearing Price
The point where the quantity demanded equal to the quantity supplied.

3. Price Floor
Government Price controls = when a gov’t sets a legal maximum/minimum price in a market
Price floor = legal minimum for a good, service, or factor of production.
Anything below the price floor = illegal
i.e. minimum wage
Creates a surplus on the market

4. Price Floors Surplus = when supply is greater than demand
Price floor = surplus = gov’t sets price higher than consumers willing to buy
Minimum wage = surplus
In this case:
Consumers are businesses
Sellers are laborers
Consumers (the businesses) don’t want to buy laborers at high price

5. Price Ceiling Price ceiling = legal maximum for a good/service/fop
Charging over the maximum is illegal
i.e. rent control
Creates a shortage.
Suppliers not willing to supply market with the amount consumers are demanding at this price.

6. Price Ceiling Problems w/Price controls: Create underground markets
No taxes collected on these goods, i.e. subletting
Landlords = no incentive to keep apartments in good condition
Eventually converted to condos or sold off

7. Steping Subsidies and taxes Technology Expectations
Productivity (worker)
Inputs (costs of)
Number of sellers changes.
Government regulations

8. Nicest Number of buyers Income of consumers Complements
Expectations of Consumers
Substitutions
Taste of consumers