2. Today I will evaluate the system of market prices by answering two comprehension questions.

3. What are some signals we have to pay attention to every day? What is a price?

4. The monetary value of a product as established by supply and demand How do high prices signal buyers? How do low prices signal producers?

5. Neutral- like a compromise Flexible- can absorb “shocks” Easy- you know what $50 means Cheap- no cost to administer

6. How could gas be rationed in the US? How much does rationing cost? Will the system be misused? Would you have incentive to produce?

7. Why would Ford Motor Company offer $5000 rebates on Expeditions?

8. How does an economy function without prices? Rationing Govt. decides Coupons What are the problems with rationing?

9. Supply is greater than the demand What is the opposite of a surplus?

10. Demand is greater than the supply

11. Price determined by supply and demand Think: What could disrupt an equilibrium price?

12. Agriculture Weather Pests

13. Oil China and India Hurricanes

14. Rent control- governments prevent equilibrium prices Minimum upkeep Best units converted to condos or offices Businesses desert the area What might you do if the building you owned was subject to rent control?

15. Minimum wage Provides equity Is the minimum wage good or bad for the economy?

16. Target prices and deficiency payments Loan payments or crop harvest Govt. acquired huge surplus of food Who gets surplus govt. food? Land banks

17. The stock market is an indicator of good or bad policies What happened to the stock market when Pres. Obama was reelected?

18. How is price determined on eBay? What has eBay done to attract more shoppers?