PRICES by ert554898

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									PRICES
Unit Review
             PRICES
• What is a situation in which quantity
  supplied is greater than quantity
  demanded? It is also known as excess
  supply.

  Shortage    Surplus   Equilibrium
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• Surplus
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What is a situation in which quantity
 demanded is greater than quantity
 supplied? Also known as excess demand.

  Shortage    Surplus   Equilibrium
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• Shortage
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• What is a system of allocating scarce
  goods and services using criteria other
  than price?

 Supply Shock            Rationing
 Black market
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• Rationing
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• What is a market in which goods are sold
  illegally?

 Supply Shock      Rationing
 Black Market
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• Black Market
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• What is a state of balance? Where
  Quantity Demanded equals Quantity
  Supplied.

  Shortage    Surplus   Equilibrium
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• Equilibrium
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• What is it called when the government or
  some outside force sets the market price
  at a level other than market equilibrium?

 Price Ceiling      Price Floor
 Price Control
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• Price Control
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• What is it called when a government
  regulation is established that prevents
  prices from rising above a certain level?

 Price Ceiling      Price Floor
 Price Control
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• Price Ceiling
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• What is it called when a government
  regulation is established that prevents
  prices from falling below a certain level?

 Price Ceiling       Price Floor
 Price Control
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• Price Floor
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Which one can lead to a shortage in the
market?
Price Floor   Price Ceiling


Which one can lead to a surplus in the
 market?
Price Floor   Price Ceiling
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Question # 1
  – It is a Price Ceiling


Question # 2
  - It is a Price Floor
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• What type of price control is an example of
  the minimum wage laws?
  – Price Floor     Price Ceiling


• What type of price control is an example of
  the New York City Rent Controls?
  – Price Floor     Price Ceiling
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• Question # 1
  – Price Floor


• Question # 2
  – Price Ceiling
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• What is a government restriction that is
  placed on a product that will keep prices
  from increasing?

     Price Support        Price Freeze
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Price Freeze
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• What is a government subsidy of an
  industry to help the market?

  Price Support         Price Freeze
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• Price Support
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• What industry is the most common of all
  price supports?
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• Agriculture
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• How does the “Target Price” system work
  in a price support by the government?
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• The government sets a price for the grain
  ($ 4.00/bushel). Farmer grows the grain
  and sells it on the open market (say
  20,000 bushels). Say the farmer receives
  $ 3.00/bu. He would make $ 60,000 for his
  crop. He then submits to the government
  for the addition $20,000 that they owe him.
  He makes $ 80,000 for his work that year.
           PRICES
• What happens to the Equilibrium Price and
  Quantity if the Supply Curve moves to the
  RIGHT?
          PRICES
• EP would Decrease and EQ would
  Increase. EP and EQ would move in the
  opposite direction.
           PRICES
• What happens to the Equilibrium Price and
  Quantity if the Supply Curve moves to the
  LEFT?
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• EP would Increase and EAQ would
  Decrease.
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• What happens to the Equilibrium Price and
  Quantity if the Demand Curve moves to
  the LEFT?
          PRICES
• EP would Decrease and EQ would
  Decrease. Both EP and EQ would move in
  the same direction
           PRICES
• What happens to the Equilibrium Price and
  Quantity if the Demand Curve moves to
  the RIGHT?
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• EP would Increase and EQ would
  Increase.
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• What is a Incidence of Tax (or Tax
  Incidence)?
           PRICES
• That is who really pays for the tax that is
  added to the product during the process of
  making that unit.
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• What happens to the Supply Curve if a tax
  is added to the production process of a
  product?
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• The Supply Curve would move to the
  LEFT. It will cost that company more
  money to produce each unit and thus will
  have less units they can make.
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• What is it called when a consumer goes to
  the store to buy a product and has a
  budget, but does not have to spend the
  whole budget on that product?

• Consumer Surplus
• Producer Surplus
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• Consumer Surplus
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• What is called when as a producer you
  receive more money for your product that
  you expected to receive?

• Consumer Surplus
• Producer Surplus
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• Producer Surplus
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• Draw a Demand Curve for something that
  is inelastic like Insulin.
• Draw a Demand Curve for something that
  is elastic like Garden Vegetables.
• Draw a Supply Curve for something that
  has natural restriction on it like oranges.
• Draw a Supply Curve for something that
  has no natural restriction on it like
  personal computers.
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• What are the FIVE advantages of Prices?
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• They are Neutral, Flexible, Freedom of
  Choice, No Administrative Costs, and
  Efficient

								
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