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Economics Supplemental Notes for Chapter 5 PRICES
Benefits of the Price System Information Incentives Choice Efficiency Flexibility
Limitations of the Price System Also called MARKET FAILURES –Fails to account for some costs and cannot distribute them appropriately.
Market Failures Externalities –Negative –Positive Public Goods Instability
Questions What is market equilibrium? How does the price system handle product surpluses? Shortages? How do shifts in demand and supply affect market equilibrium?
Setting Prices Price Ceilings Price Floors
Consequences of Setting Prices Ceilings / Floors can prevent the market from reaching equilibrium. EXAMPLE: Rental property in NYC.
Rationing Sometimes supply of a good is so low that a government rations to keep some supply. RATIONING: The govt. or other institution decides how to distribute a product.
Rationing doesnt happen often in free enterprise WWII – Rationing tires, gas, meat, butter, sugar, coffee. TODAY: College sporting events. Alums and current students get priority in seating.
Consequences of Rationing Unfair Expensive Creates black markets (underground economies)
Economics Chapter 5. Section 1 Objectives: 1. What is the role of the price system? 2. What are the benefits of the price system? 3. What are the limitations.
Chapter 5 Prices Section 1 The Price System 1. I. The Language of Prices Prices are the main form of communication between producers and consumers 2.
Prices CHAPTER 5 SECTION 1: The Price System
Managing Prices 5.3 Price Ceilings —A government regulation that establishes a maximum price for a particular good or service. –Ex. Affordable housing/
Chapter Five: Welfare Analysis. Consumer Surplus.
Chapter 6.3 Notes The Price System. The Language Of Price A system that is a form of communication between producers and consumers. If the consumer wants.
Mr. Bammel. Equilibrium Projects As I discuss all the topics of the equilibrium projects, think about each and be sure that what you put in your projects.
Bellringer Many companies sell different types of cell phones. Some consumers prefer to use a specific brand because of its different kind of features.
The Price System Or Price as the Regulator. Price Price is the monetary value of a product as establish by supply and demand. Price is the monetary value.
Explorations in Economics
Chapter Price 6. Objectives: Students will learn… How the market establishes an equilibrium price How the equilibrium price balances supply & demand How.
Chapter 6: Prices Section 3
Thoughts—Fill in blanks Consumers tend to demand (more/less) of a product when the price is low and (more/less) when the price is high. Producers tend.
Managing Prices. How are price system limitations dealt with? The price systems limitations sometimes lead governments to intervene in the market. Governments.
Chap. 6.1 Market Forces. Market Equilibrium Equilibrium- when the quantity consumers are willing and able to buy equals the quantity that producers are.
The Free Market Price: EQUILIBRIUM & GOVERNMENT Ch. 6, Sect. 6 Why does the government intervene in the market? How does the government intervene? What’s.
The Roles of Prices Chapter 6 Section 3.
Summary Notes Economics 230 Part I. Chapter I Economics is concerned with the implications of relative scarcity A consequence is that there is no free.
Unit 3 Microeconomics: Prices and Markets
Essential Question: What is the right price?. Putting _____ and ________ together If you are a seller, how do you know how much to charge for your.
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