Ch.+6+notes&hw

6.1 Notes: 1. Equilibrium is unique because it is the point at which quantity demanded and quantity supplied are equal. 2. A situation that can lead to excess demand is, when quantity demanded is more then the quantity supplied. 3. Price floor is the minimum that the government can in-force to make someone charge. Price ceiling is the maximum that is set by law, which makes things more affordable for people.
 * Equilibrium is the point at which quantity demanded and quantity supplied are equal.
 * Disequilibrium is any price or quantity not at equilibrium, this is when a quantity is Supplied is not equal to quantity demanded is more than the quantity supplied.
 * Excess demand is when quantity demanded is more then the quantity supplied.
 * Excess supply is when quantity supplied is more than quantity demanded
 * Price ceiling a maximum price that can be legally charged for a good or services
 * Price floor is a minimum price for a good or service.
 * Rent control is a price ceiling placed on rent.
 * Minimum wage is a minimum price that an employer can pay a worker for an hour of labor.
 * The market would be in equilibrium and people would be able to afford more spots.
 * A price ceiling is a maximum price, set by law, that sellers can charge for a good or service.
 * The equilibrium price and quantity can be found where quantity supplied equals quantity demanded, or the point where the supply curve crosses the demand curve.
 * 1) 1-3 pg.131

6.2 Notes
 * Surplus is the situation in which quantity supplied is greater than quantity demanded; it is also known as excess supply.
 * Shortage is the situation in which quantity demand is greater than quantity supplied.
 * Excess demand is also known as shortage.
 * Search costs are the financial and opportunity costs consumers pay when searching for a good or service.
 * Excess demand will lead firms to raise prices.
 * Higher prices induce the quantity supplies to rise and the quantity demand to fall until the two values are equal.
 * Since the market equilibrium occurs at the intersection of a demand curve and a supply curve, a shift of the entire supply curve will change the equilibrium price and quantity.
 * Equilibrium in a bad market would move the curve downward and to the right.
 * The supply curve would move to the left because the quantity supplied is lower at all price levels.
 * When a fad is in its peak the demand can fall quickly as it rose.
 * Excess demand turns into excess supply when there is a fall in demand.

6.3 Notes
 * Supply shock is a sudden shortage of a good.
 * Rationing is a system of allocating scarce goods and services using criteria other than price.
 * Black market is a market in which goods are sold illegally.
 * Spillover costs are costs of production that affect people who have no control over how much of a good is produces.
 * Sweaters sell for different prices depending on style, and type of yarn.
 * Prices serve a vital role in a free market economy.
 * Prices help move land, labor, and capital into the hands of producers and finished goods into the hands of buyers.
 * Buyers and sellers alike look at prices to find information on a good demand and supply.
 * The law of supply and the law of demand describe how people and firms respond to a change in prices.
 * A supply shock creates a problem of excess demand because suppliers can no longer meet the needs of consumers.

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