1. Arianna Rodriguez Ana Selman Luis Garced Chris Hameed Period: 5

2. Balancing the market!* (First part)

3. Demand Schedule shows how much are costumer meant to buy at different prices. A Supply Schedule shows how much are sellers meant to sell at different prices. Equilibrium is the balance between demand and supply when they come together. It’s the point of balance between price and quantity. Equilibrium can be represented by a demand & supply graph. disequilibrium. If the market price or quantity supplied is anywhere but at the equilibrium point, the market is in a state of disequilibrium. Excess demand occurs when quantity demanded is more than quantity supplied.

4. A low price in a market encourages buyers and discourages sellers. As long as there’s excess demand and the quantity demanded exceeds the quantity supplied; suppliers will keep raising the price. Price ceiling Price ceiling: maximum price that can be legally charged for a good. Price floor Price floor: minimum price for a good or service. The government places price ceilings on some goods that are considered essentials and may become way too expensive for some consumers. Rent control Rent control: a price ceiling placed on rent. It reduces the quantity and quality of the houses, it may help some households owners, but harm others with poor requirements. Price floor Price ceiling

5. (Second part) Cost of Price ceilings!*

6. -WHEN PRICES OF HOUSEHOLD ARE NOT BALANCED OUT THEY DIVIDE IT AND HALF WILL GET THE APARTMENT AND THE OTHER WILL NOT. -GOVERNMENT HELPS OUT IN THE RENT. -THE ONLY WAY YOU CAN GET A RENT-CONTROLLED HOUSEHOLD IS IF FAMILY MEMBERS PASS IT DOWN TO YOU. -IN THE 1900’S NEW YORK PASSED A LAW TO NOT ALLOW GOVERNMENT TO HELP THE WEALTHIEST PEOPLE WITH RENT- CONTROL. * MINIMUM WAGE- THE MINIMUM PRICE SOMEONE CAN PAY A WORKER FOR THE WORK THEY DO.

7. -IF PEOPLE ARE ALLOWED TO RAISE THE PRICES UP FOR THE COST OF A HOUSE THEN THE AMOUNT OF HOUSES OR APARTMENTS THAT WOULD BE SOLD/RENTED WOULD DROP.. *PRICE FLOORS THE PRICE THAT THE GOVERNMENT SETS FOR A GOOD OR SERVICE. PRICE FLOORS ARE MOSTLY KNOWN FOR THE MINIMUM WAGE. THE FEDERAL GOVERNMENT GIVES A LEVEL FOR THE MINIMUM WAGE; AND THE STATES BRING IT HIGHER. THERE ARE MORE PEOPLE LOOKING FOR WORK THAN PEOPLE ACTUALLY HIRING. PRICE FLOORS IS USED FOR EVERYTHING; MOSTLY FOR FARM PRODUCTS.

8. Equilibrium!*

9. In economy, the markets’ price and quantity move generally to equilibrium levels, because when there is an excess of demand. Then there is raise of price and the quantity supplied to rise and the quantity demanded fall and in that way everything becomes equal or in equilibrium. The same happens backward when they cut prices.

10. Understanding a shift in supply. When there is a new electronic device, which just came out, its price is extremely high. But when the time passes and there are newer electronic devices then the price of the old one goes down. Finding a new equilibrium. At the beginning the prices of a production are high, but when it decreases its price then the demand gets higher. Changing equilibrium. When there is an old electronic device, its price is always changing and going down. And its production increases. People who want to sell this old product are always looking for new equalities and methods of production change, which make them to sell and move this product out of stores.

11. There are lots of facts affecting curves. If those facts cause less production then the prices will get higher and people would buy less, which would decrease the demand of the product.

12. Unexpected changes on demand disturb the equilibrium of market. This happens mostly in November because of a new toy’s creation. The problem of excess demand When the demand exceed, it causes shortage. It also causes search cost it would be expensive because you re looking if what you want is in another place. Return to equilibrium. When there is shortage and you want to buy a product you have to pay extra money in order to have a kept product from the next shipment, which increases prices and maintain equilibrium between demand and price. A fall in demand. As fast as the demand exceed as fast as it falls, which cause less demand and lower prices.

13. (First part) Prices!*

14. Prices are involved in all parts of the economy. They help move the three factors of production into the hands of producers. Then with prices producers can sell to consumers. People are always finding ways to get their goods for cheaper prices. Prices in the Free Market

15. Without prices there would be bartering in which people would be buying and selling with any kinds of objects. –This way all goods would be traded at uneven values. –Because of this producers won’t know what they should be producing. –Without prices supply and demand would be irregular an all goods would either be –overproduced or under produced. The way prices work can be simplified in two ways. –If an object is selling for a high price it tells producers that the good is in demand. –If it is selling at a low price it usually means it is either overproduced or it is no longer in demand. Price can also be malleable in a sense. –If a good is in too high a demand then its price will go up to subdue excess demands. –If the good has an excess of supply then the price can be lowered to eliminate the supply. The price system requires no planning. –Differently from a centrally planned economy a system working with prices costs nothing to startup or maintain. The Advantages to Prices

16. With different prices come different kinds of goods. In command economies because the government tries to limit spending they restrict production to only certain kinds of goods. In command economies everything is available for very cheap but because of this things were hard to find. –With this difficulty came shortages of goods and when goods were found people had to wait for very long to even have a chance at this. The U.S. found a similar problem when it temporarily controlled prices in WWII but it wasn’t as severe. –Even though rationing systems work to an extent people sometimes ignored the government to make some extra income on the side. When this kind of thing happens it is referred to doing business on the black market. As much as it is discouraged it is something that always comes as a consequence of rationing. A Wide Choice of Goods

17. (Second part) Prices!*

18. The free market allows all the factors of production to be used for their best attribute. Market System - The system that allows consumers to get the goods they want the most by its freedom to change prices. Price-Based System - The system that basically changes the resource use if consumers demand another good. When the market & price-based systems because of the consumer’s interests, no one is personally changing and it just happens Efficient Resource Allocation

19. Most efficient way to use our society’s scarce resources 1. Resource owners sell their resources to the person/group who gives them the highest price. 2. Because of that, the person/group will usually become a big company and provide the best goods. 3. The result of all this is that the best resources will be given to the people. E.R.A. (continued)

20. When demand exceeds supply, prices skyrocket causing consumers to buy expensive things causing more profit for the resource owners. The Wealth of Nations - Adam Smith wrote this novel in 1776 - States that successful companies become big by providing goods that are the most popular among consumers. Market Problems 1. Imperfect Competition 2. Spillover Costs 3. Imperfect Information Prices and the Profit Incentive

21. Imperfect Competition - Causes the prices to be expensive, and that would change a lot of decisions between consumers. Spillover Costs - “Externalities” - Since the makers of goods just have to produce it, the prices they give to markets are low. Since the market has the price incentive, consumers tend to pay the spillover cost. Imperfect Information - When companies don’t give out enough information to a consumer. - Causes consumers to make poor decisions. Market Problems

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