CHAPTER SIXPRICES

Equilibrium

When demand meets supplyDemand greater than supply – shortageSupply greater than demand - surplus

Government interference with prices

Price ceilings◦Rent control

Price floors◦Minimum wage

Prices

Read 137-140What is the argument for and against rent

control?With partner, answer number 1 + 2 on p.

138

Prices

What is the argument for and against minimum wage?

With partner, answer number 1 + 2 on p. 139

Assessment

With table partner, complete Number 11 on page 140

Question of the Day

What are the two ways in which the government controls prices? Please provide an example of each.

Changes in Market Equilibrium

Moving toward Equilibrium- Price and quantity will move

toward equilibrium levelsTwo Factors that can lead to Disequilibrium

-Shift in supply curve-Shift in demand curve

An Increase in Supply◦A Changing Market that increases supply Inventory will pile up (surplus)Suppliers will reduce prices to clear out the surplus

With the lower price, demand will increase and the market will find equilibrium

A Decrease in Supply◦As supply decreases, suppliers will raise their prices

◦Demand will fall◦With the lower price, demand will increase and the market will find equilibrium

An Increase in Demand◦ Supply . . . ◦ Price . . .

A Decrease in Demand ◦ . . . ◦ . . .

Complete Number 10 on page 147

Vocabulary

Supply shockRationingBlack market

Question of the Day

In your notebook:◦Design a supply/demand curve that illustrates a

change in equilibrium based on an increase in supply.

Review

Review◦How does the government affect supply? (3)◦How does the government affect prices? (2)

Chapter 6: Pictionary Time

EquilibriumDisequilibriumShortageSurplusSupply shock RationingBlack Market

Price ceilingRent controlPrice floorMinimum wageInventoryFad

Question of the day.

What could be negative consequences to:◦A. Rent control◦B. Minimum wage

Sketch:◦Advantages of Price-based system◦Shortage and Surplus◦P. 155

Pop Quiz

Your Group Project (1-3 members)

Design your own businessSelect a name and productGraph how your business would respond to:

Supply shock Increase in supply Decrease in demand Increase in demand

Explain the reasons for the aboveBe realistic and be neat!Due at the end of class on Friday