1. Bellringer Pick up a Review packet from the front table.
Take the first part of class to look over this packet.
Mark those slides you need to study and those slides you know well and don’t need to study.

2. Mr. Wyka Economics Citrus High School
Mid Course Review 6
Mr. Wyka
Economics
Citrus High School
Questions (skipping 30 because it’s stupid)

3. PRICE CONTROLS
Who likes the idea of having a price ceiling on gas so prices will never go over $1 per gallon?

4. To have an effect, a price ceiling must be below equilibrium
Maximum legal price a seller can charge for a product.
Goal: Make affordable by keeping price from reaching Eq.
To have an effect,
a price ceiling must be
below equilibrium P
Gasoline S $5 4 3 2 1
Does this policy help consumers?
Result: BLACK MARKETS
Price Ceiling
Shortage
(Qd>Qs) D o Q 4

5. To have an effect, a price floor must be above equilibrium
Minimum legal price a seller can sell a product.
Goal: Keep price high by keeping price from falling to Eq.
To have an effect,
a price floor must be
above equilibrium P
Corn S $ 4 3 2 1
Surplus
(Qd<Qs)
Price Floor
Does this policy help corn producers? D o Q 5

6. Surpluses will develop
Practice Questions
1. What would happen if a price floor is set ABOVE the market equilibrium price?
Surpluses will develop
2. What will happen if the gov’t sets a price ceiling
BELOW the market equilibrium price?
Answers: D C
A price ceiling causes a shortage if the ceiling price is above the equilibrium price

7. How can we increase a worker’s productivity?
Buying hamburger and buns for a burger restaurant.
Buying napkins and hamburger boxes for a burger restaurant.
Buying toilet paper and soap for the patrons’ bathrooms.
Buying stock in a burger company.
Buying new burger stoves and bun warmers.
Providing workers with training to use the new burger stoves and bun warmers.

8. Can the government help a nation achieve long term economic growth
Can the government help a nation achieve long term economic growth? If so, how?
Government policy can be used to affect either Consumers or Businesses.
Changes that put more money in consumers’ pockets, like tax breaks, can affect Short Term Economic Growth.
To bring about LONG TERM Economic Growth, Businesses have to be targeted.
Tax breaks
Deregulation
Lower export barriers. 34

9. Monopoly
A market dominated by one seller of a good for which you can’t easily find a substitute is a ….
Monopoly
Anti-trust laws do not allow the forming of natural monopolies. Why? Why does the government want to prevent monopolies?
(Except those it creates, of course. Like power companies.)
See the next slide for the answer…..

10. Because there is little external pressure to be efficient
Monopolies are inefficient because they…
Charge a higher price
Don’t produce enough
Not allocatively efficiency
Produce at higher costs
Not productively efficiency
Have little incentive to innovate
Why?
Because there is little external pressure to be efficient 10

11. Do we have legal monopolies in the United States?
Sure! Public Utilities are legal monopolies.
Electric companies
Water companies
Sewer treatment
Etc., etc.

12. LIMIT INFLATION One of the government’s economic goals is to
Country and Time-
Zimbabwe, 2008
Annual Inflation Rate-
79,600,000,000%
Time for Prices to Double-
24.7 hours

13. Inflation vs. Deflation
Inflation is a rising “general” level of prices that reduces the “purchasing power” of money.
When we measure inflation, we don’t include luxury items.
We measure common foods and household items.
Deflation is a falling level of prices that increases the “purchasing power” of money.
Important

14. Tax Structures Proportional Progressive Regressive
Takes the same % of tax from all taxpayers regardless of their income.
Progressive
The more $ a person makes, the higher % of tax he/she pays.
Regressive
Taxes lower incomes at a higher % than higher incomes.

15. Regressive Taxes Regressive
Taxes lower incomes at a higher % than higher incomes.
Sales Taxes are considered Regressive because lower income earners spend a higher percentage (%) of their income on purchases than do higher income earners.

16. Episode 15 Price Floors and Ceilings by the amazing mjmfoodie