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PRICES Lesson 9.

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Presentation on theme: "PRICES Lesson 9."— Presentation transcript:

1 PRICES Lesson 9

2 Balance the Market Equilibrium – where price and quantity are the same
GOOD AND STABLE! QD=QS

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4 Disequilibrium – any price or quantity not at equilibrium
QD NOT EQUAL TO QS

5 Excess Demand Excess demand – quantity demanded is more than quantity supplied Long lines at your pizza joint….raise the prices As long as QD exceeds QS, keep raising the prices

6 Excess Supply Excess supply – quantity supplied is higher than quantity demanded Throwing away too much? Sellers don’t want to waste their resources!!!!

7 Government control Price Ceiling Price Floor
Max price set by law that sellers can charge for a good or service Ex. Apartment rent Min price set by law that must be paid for a good or service Ex. Minimum wage

8 Changes in Equilibrium
REMEMBER ALL THE CHANGES?

9 As technology gets better, prices fall.
Early CD Players 1980s…..$1,000 As technology gets better, prices fall.

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11 Surplus – quantity supplied exceeds quantity demanded (excess supply)
How do you respond?

12 Shortage – quantity demanded is greater than quantity supplied
How do producers respond?


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