1. Equilibrium: Again Buyers can buy all they want and sellers can sell all they want at the equilibrium price

2. Price per Bottle Bottles per week 0 S D California White Wine $11.00 $13.00 $9.00 AB H G Є 3,5004,5005,500 Surplus Shortage

3. Price per Bottle 0 S D1D1 Bottles per week Increase in the price of white wine substitutes (red wine, scotch, beer...), ceteris paribus D2D2 $11.00 $13.00 4,5005,500

4. Keep in mind that as the equilibrium price and quantity of white wine increases, a greater share of scarce resources will be allocated to the production of white wineleaving fewer resources for everything else

5. Price per Bottle 0 S D0D0 Bottles per week Increase in the price of white wine complements (lobster, turkey...), ceteris paribus D1D1 $9.00 $11.00 3,5004,500

6. Price per Bottle 0 S D0D0 Bottles per week Increase in the consumer incomes, ceteris paribus D1D1 $9.00 $11.00 3,5004,500

7. Price per Bottle 0 S1S1 D1D1 Bottles per week Increase in the price of white grapes, ceteris paribus S0S0 $11.00 $13.00 4,5003,500

8. Simultaneous Shifts of Supply and Demand a a Hoursof Day Care Price per Hour S 1990 S 2001 P Q P 1990 Q D D 2001 A B

9. Effect of Supply and Demand Shifts on Equilibrium Price and Quantity

10. Price Floors and Ceilings Legal restrictions on market price Price ceiling: The highest price at which it is legal to trade a particular good, service, or factor of production. Examples: Rent controls in NYC; Usury ceilings in Arkansas; ceilings on grain storage fees in Illinois. Price floors: The lowest price at which it is legal to trade a particular good, service, or factor of production Examples: Dept. of Agriculture loan rates for corn, soybeans, cotton, rice, peanuts,... ;The minimum wage.

11. Monthly Rent Rental Units 0 S D 4,0005,7007,000 $900 $1,120 Shortage If the Rent Control Board sets a ceiling of $900 per month, 3,000 apartment- seekers wont be able to find one. The rental housing market in New York City

12. Does the minimum wage create unemployment? Quantity (thousands of workers) D S Wage rate (dollars per hour) 0 37 unemployment $5.15

13. I believe increasing the minimum wage will cause unemployment among the unskilled and less- educated to rise

14. P/BU bushels 0 #2 Hard KC Wheat S D 550700850 $2.52 $3.20 Surplus A price floor of $3.20 per bushel will produce a surplus of 300 bushels. But what if the floor were set at $2.35?