_____-: the point at which quantity demanded and quantity supplied come together
Equilibrium
Equilibrium on a graph is where the ______
intersection point
If the market price or quantity supplied is anywhere but a equilibrium price, the market is in state called ________
disequilibrium
interactions between buyers and sellers will always push the market back towards equilibrium unless _____
unless the government interferes
in some cases the ________ steps in to control price. (ex price ceilings and price floors)
government
____________: A maximum price that can be legally charged for a good
price ceiling (create shortages)
Rent Control (A situation where the government sets a maximum amount that can be charged for rent in an area. Usually in large cities- NYC or LA) is an example of ________
price ceiling
__________: A minimum price, set by the government, that must be paid for a good or service.
price floor
Minimum Wage- sets a minimum price that an employer can pay a worker for an hour of labor
Luxury or “Sin” Taxes- items like alcohol, cigarettes and gas have extra taxes
these are both examples of….
price floor
The point where supply and demand meet can change for ____ reasons
three
change in supply, change in demand, change in price are all reasons that __________
the point where supply and demand meet (Equilbirium) changes
___________: Excess supply leads to a surplus (when supply is greater than demand). This leads to a decrease in price and in increase in demand.
- Ex: After Christmas sales
A decrease in supply leads to an increase in price. This leads to a decrease in demand.
change in supply (reason for point where supply and demand meet to change)
__________: if there is a shortage, when demand is greater than supply, price rises, which increases supply and decreases demand
Ex: Tickle Me Elmo
When demand falls, suppliers cut prices and find a new equilibrium
change in demand (a reason for where the point where demand and supply meet change)
_______: As prices change, supply and demand will both change.
change in price (reason why the point where supply and demand meet changes)
Prices are vital in a free market economy
They help move land, labor and capital into the hands of producers and finished goods to buyers.
Price is a language both consumers and producers can use to determine value.
ARE ALL REASONS WHY….
prices are important
price as an incentive, price as signals, flexibility of prices, price system is “free” are all _____
advanatges of price
__________:
Price shows to buyers and sellers whether a good or service is scarce or easily available. Encourage or Discourage production.
price as an incentive (advantages of price)
________–: - A high price (green light) tells produce to make more. Low Price (red) tells producers to make less
price as signals (advnatges of price)
________: Prices are generally more flexible than production levels, can be easily increased or decreased
flexibility of prices (advantages of prices)
_____________: A distribution system based on price costs nothing to administer, unlike in command economies
price system is “free” (advantages of price)
if there is scarcity of an item then the price will be ________
high
if an item is being boycotted, then the price will _____
go down (if everyone stopped buying gas the price would drop)
how does the war affect price of certain items?
price of many items have increased,
