1. PRICES
Lesson 9

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

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.

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?