1. Supply and Demand 5-3

2. 1. What is Demand Schedule? -How much consumers are willing to buy at various prices

3. 2. What is Supply Schedule? -How much sellers are willing to sell at various prices

4. 4. What is Equilibrium? -Point of balance between price and quantity

5. 5. What will buyers find on shelves at equilibrium? -There will be ample supply on shelves

6. 6. What will firms find at equilibrium? -There will be enough buyers for their goods

7. 7. What is Disequilibrium? -When quantity supplied is not equal to quantity demanded

8. 8. What is Excess Demand? -Quantity demanded is more than the quantity supplied

9. 10. What will happen to customers at excess demand? -They will have to wait in long lines or not get the product they want

10. 11. What should a business do at excess demand? -Increase the price

11. 12. What is Excess Supply? -Quantity supplied exceeds the quantity demanded

12. 14. What causes excess supply? -High prices or excess or over production

13. 15. What will customers do at excess supply? -Buy less or buy an alternative

14. 16. What is a Price Ceiling? -Maximum price set by law that sellers can charge for a good or service

15. 17. Give an example and explain. -Rent Control, can only charge so much

16. 18. What problems do price ceiling cause? -Reduces quantity and quality -Waiting lists, discrimination, and bribery

17. 19. What are Price Floors? -Minimum price set by the government that must be paid

18. 20. Give an example. -Minimum Wage

19. 21. What happens if price floors are set wrong? -Decrease in employment and benefits -Prices of products increase sharply

20. 22. How did the government try to work price floors into agriculture? -Minimum price set, but if it goes below then the government creates demand by purchasing excess crops

21. 23. What does the government do instead today? -Provides emergency financial aid to farmers