Equilibrium - mrsbradleysclass
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Transcript Equilibrium - mrsbradleysclass
What is the Right Price?
MRS. BRADLEY
NEWARK HIGH SCHOOL
--SOME SLIDES COURTESY OF JUSTIN
MILLER
A tale of two curves
Demand Curve
Supply Curve
How do Supply and Demand interact?
The intersection of supply and demand is very
important
Equilibrium
Equilibrium Price – the price that both buyers and
sellers will accept
It’s the point where the supply curve and the demand
curve intersect.
So EQUILIBRIUM is the point at which demand for
a product or service is equal to the supply of the
product or service.
But what if suppliers want to raise the price above
equilbrium?
When supply is greater than demand, a surplus of
goods/services occurs
Meaning there is more product available than is
being consumed
What if consumers want more than is being
produced
When demand is greater than supply, a shortage of
goods/services will occur
Meaning there is not enough product to meet
consumer demand
Disequilibrium
Any price or quantity not at
equilibrium
When the quantity supplied is
NOT equal to quantity
demanded.
Shortage
A situation in which buyers want more of a good or
service than sellers are willing to make available at a
particular price.
Can you think of an example?
Surplus
When quantity supplied is more
than quantity demanded.
Sellers have extra goods.
They don’t like this --- especially
if the goods are perishable.
Shortage or Surplus?
A very popular singer is coming to a town to perform
a concert in a concert hall that seats 10,000 people.
The ticket price for the concert is $30.00 per person.
There are 30,000 fans in the area who are willing to
pay $80.00 per seat to listen to the concert. What
will happen?
When the government steps in…
Price ceiling: a maximum price that can legally be
charged for a good and a service.
Price floor: the lowest price allowed for a good or a
service.
Two exampleS
Rent control: a price ceiling placed
on rent
Minimum wage: the minimum
price that an employer must pay a
worker for an hour of labor.
Another way….
… that government influences prices.
Often given to farmers to keep crop prices high.