1.  Economics Mr. Bordelon

2.  The point at which quantity demanded and quantity supplied are equal.

3. o Equilibrium

4.  Any situation in which quantity supplied exceeds quantity demanded.

5. o Excess supply o Surplus

6.  Any situation in which quantity demanded exceeds quantity supplied.

7. o Excess demand o Shortage

8.  A government-mandated minimum price that must be paid for a good or service.

9. o Price floor

10.  A government-mandated maximum price that is allowed to be charged for a good or service.

11. o Price ceiling

12.  What role does the government play in determining some prices?

13.  The government can offer price floors, such as farm subsidies or minimum wage, and price ceilings, such as rent control.

14.  What problem can a price floor cause?

15.  Price floors can cause excess supply.

16.  Explain how to interpret the supply and demand graph. o Equilibrium o Demand o Supply o Price and Quantity o Shift of Supply or Demand

17. Price of a slice of pizza QdQs $0.50300100 $1.00250150 $1.50200 $2.00150250 $2.50100300 $3.0050350  Where is equilibrium? How do you know?  Where is a shortage? How do you know? How much is that shortage?  Where is a surplus? How do you know? How much is that surplus?

18. Price of a slice of pizza QdQs $0.50300100 $1.00250150 $1.50200 $2.00150250 $2.50100300 $3.0050350  Where is equilibrium? How do you know? $1.50, Qd = Qs.  Where is a shortage? How do you know? How much is that shortage? $0.50 - $1.00, Qd > Qs, 200 ($0.50) or 100 ($1.00)  Where is a surplus? How do you know? How much is that surplus? $2.00 - $3.00, Qs > Qd, 100 ($2.00), 200 ($2.50), or 300 ($3.00)

19.  Why have some cities and towns passed rent control laws? How do these laws affect price equilibrium? What happens when these laws are repealed?

20.  Rent control laws are enacted to control inflation of prices and assist lower-income groups. The laws cause disequilibrium, resulting in a shortage. When rent control is repealed, the prices increase to equilibrium, and lower-income residents are forced to leave.

21.  What kind of goods would governments place price ceilings?

22.  Essential but generally too expensive.

23.  What happens when we have a minimum wage?

24.  In theory, businesses would hire fewer workers because they would have to pay higher than the equilibrium price.

25.  What happens when the supply of a good is greater than the consumer wants to buy, that is, how do we get rid of the surplus?

26.  Either the good remains unsold or the price drops (the latter more likely).

27.  Technology reduces production costs. If demand remains unchanged, what happens to the product sold? (Hint: Supply increases!)

28.  More goods will be sold at a lower price.

29.  How do you calculate the shortage here?