1. Supply and Demand at Work 21.3 & 21.4

2. What is Supply and Demand The amount of goods a producer is willing to sell at market prices. Opposite of demand Law of Supply - suppliers offer more goods at higher prices and less at lower prices Profit: the reason suppliers offer goods and services Market Supply: all the supply available in a given market

4. Why does supply change? Cost of resources Productivity Technology Government Policies Taxes Subsidy: government payment for a certain action. Expectations Number of Suppliers

7. Supply Elasticity How quickly suppliers can change supply Inelastic: not able to change the supply quickly Elastic: Able to change the supply quickly

8. Supply, Demand and Price Supply and Demand work together to create a price. Equilibrium price: the point where supply matches demand Surplus: Supply is greater than demand – Price is too high Shortage: demand is greater than supply – Price is too low.

10. Price Controls Government can regulate price if they feel forces of demand and supply are unfair. Price Ceiling - Maximum price set by the government that can be charged Price Floor – the minimum price that can be charged. Minimum Wage- lowest legal wage that can be paid to workers.

11. North Carolina’s Minimum Wage Minimum Wage by State

12. Prices as Signals Consumer Price Index: measure the costs of goods over times Prices tell us what people are buying. Prices are neutral Prices are flexible Prices show freedom of choice Prices are familiar