1. Chapter 6 Section 1

2. Excess demand- when quantity demanded is more than quantity supplied
Equilibrium – the point of balance between quantity supplied and quantity demanded.
Disequilibrium- when quantity supplied is not equal to quantity demand.
Excess demand- when quantity demanded is more than quantity supplied

3. Excess supply- where the quantity supplied is much greater than the quantity demanded. Price ceiling- The maximum price set by the government that can be charged for a good or service. Price floor- The minimum price that can be charged for a good or a service.

4. Combined supply and demand schedule
In the market for pizza, as in any market quantities supplied and demand will be equal at only one price one quantity.
Combined supply and demand schedule
Price of a slice of pizza
Quantity demanded
Quantity supplied
result
$.50
300
100
Excess Demand
$1.00
250
150
$1.50
200
equilibrium
$2.00
Excess Supply (Surplus)
$2.50
$3.00 50
350

5. A price of $1.00 per slice of pizza will lead to a quantity demand of 250 slices per day and quantity supply of only 150 slices per day
The equilibrium price and quantity can be found where quantity supply equals quantity demanded or the point where the supply curve crosses the demand curve.

6. Disequilibrium will occur at any price other than $1
Disequilibrium will occur at any price other than $1.50 per slice of pizza or any quantity other than 200 slices of pizza.
Disequilibrium can produce one of two outcomes that are not equilibrium either excess demand or excess supply

7. If you do not achieve equilibrium price it can be really bad for businesses everywhere .
Not being able to reach equilibrium can eventually cause a business to go under and leave people out of a job or even homeless.

8. Excess demand and excess supply both lead to a market with fewer sells than at equilibrium price

9. You can also illustrate equilibrium with a supply and demand graph .
Firms that are willing to sell there product at equilibrium price will find buyers to buy there product.
The market system makes certain that the consumers can buy products that they want to buy. Sellers respond to all of the changing needs and tastes of the consumers

10. Buyers that will purchase at equilibrium price will find ample supplies stocked on store shelves.
Sellers respond to all of the changing needs and tastes of the consumers.
A supply schedule shows how much sellers are willing to sell at various prices.

11. Rent Control-A price ceiling placed on
Minimum wage-A minimum price that an employer can pay a worker for an hour of labor.

12. Whenever the market is in disequilibrium the prices are flexible.
Market forces will push it until it reaches equilibrium.
Sellers don’t like wasting their resources on excess supply, particularly when the goods cant be stored for long like pizza.

13. As long as there is excess demand, and the quantity demanded exceeds the quantity supplied, suppliers will keep raising the price.
When the price has risen enough to close the gap, suppliers will have found the highest price that the market will bear.
Markets tend toward equilibrium, but in some cases the government steps in to control prices.

14. What is unique about an equilibrium price?
What situation can lead to excess demand?
It’s a lot lower.
Over pricing

15. Identify how the government sometimes intervenes in market to control prices?
They make price floors and price ceilings.

16. What is a price floor? What is a price ceiling? Minimum price
Maximum price

17. How does rent control work
How does rent control work? What are benefits and drawbacks of price floors and ceilings?
If the price is getting too high they lay a ceiling on it.
Benefits are its good for our wallets bad thing is they cant get as much cash.

18. Explain how supply and demand create balance in the market place?
Compare a market in equilibrium to a market in disequilibrium.
1. Supply gives how much you have demand gives what people want.
2. Equilibrium max profits disequilibrium minimum profits with excess supply.

19. What is an example of a price floor?
Minimum price

20. What is an example of a price ceiling?
Max price

21. What is excess supply?
Extra supply

22. What is excess demand?
More demand than supply

23. How could setting a new minimum wage give us an excess supply of workers in the U.S.?
More demand than supply