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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)
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.
Chapter 6 Section 3. Help solve shortage and surplus problems Tool for distributing goods and resources Very efficient Centrally planned is the alternative;
Economics Unit Four PRICES AND MARKETS. PRICES What is the role of the price system? The price system is the language that guides producers and consumers.
More producers in a market increases supply which leads to increased competition and a lower equilibrium price Competitive pricing occurs when producers.
1 Chapter 6 Price Ceilings & Price Floors 8/16/2014 © ©1999 South-Western College Publishing Principles of Economics 2nd edition by Fred M Gottheil PowerPoint.
When you have completed your study of this chapter, you will be able to C H A P T E R C H E C K L I S T Explain how a rent ceiling creates a housing shortage,
Market Economies at Work: Supply and Demand. Demand $ The Desire for a Good or Service and the Ability to Pay for It.
MKT-MP-5 Demonstrate an understanding of customer behaviors and the economic environment in which customer function 5.9 Describe the functions of pricing.
1 Announcements: Tuesday This week in the breakout sessions we will be reviewing market failure and surplus analysis. Case questions are up on Oncourse.
Chapter 6SectionMain Menu Combining Supply and Demand How do supply and demand create balance in the marketplace? What are differences between a market.
Lesson 7-1 The Marketplace Consumers influence the price of goods in a market economy. -A market represents actions between buyers and sellers.
Chapter 5 Policy Analysis With Supply and Demand McGraw-Hill/IrwinCopyright © 2009 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Chapter Supply, Demand, and Government Policies 6.
The Interaction of Demand and Supply Market equilibrium – a situation in which the quantity demanded of a good or service at a particular price is equal.
Equilibrium What is the Equilibrium and why is it important to both producers and consumers?
Chapter 2 Economic Systems Answering the 3 Basic Economic Questions Every economy is trying to find the best way to distribute scarce resources.
C h a p t e r f o u r ARE 201 Hendrickson Economic Efficiency, Government Price Setting, and Taxes.
Taxation and Government Intervention 8 Collecting more taxes than is absolutely necessary is legalized robbery. Calvin Coolidge CHAPTER 8 Copyright © 2010.
Supply, Demand and Government Policies Chapter 6 Copyright © 2001 by Harcourt, Inc. All rights reserved. Requests for permission to make copies of any.
The Fundamentals of Capitalism Business Management Mrs. Demers.
Government Price Control Policies and Economic Efficiency.
The Price System at Work Buyers and sellers operate with opposite motives: Buyers want low prices Sellers want high prices Both sides have to compromise.
Social Goals vs. Market Efficiency As a market, we share seven economic and social goals. Sometimes these goals are in conflict with each other. Goals.
Econ 206(A) Tutorial 8 Externalities & Public Goods.
Chapter 3 Principles of Microeconomics, 4 th Edition Instructors Manual.
Ceilings and Floors. The Role of Prices Convey information –When Tickle Me Elmos went up in price form about $30 to $300, it told us something about the.
SUPPLY, DEMAND, AND GOVERNMENT POLICIES Chapter 6 What are price ceilings and price floors? What are some examples of each? How do price ceilings and price.
A market is the interaction of buyers and sellers for the purpose of making an exchange, which establishes a price for the goods or services exchanged.
The Interaction of Demand and Supply When buyers and sellers interact, the market moves toward market equilibrium: when the quantity demanded and the.
Price Ceilings and Price Floors!. Supply, Demand, and Government Policies u In a unregulated market system with open entry and exit, market forces establish.
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