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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 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.
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.
Market Economies at Work: Supply and Demand
The Roles of Prices Chapter 6 Section 3.
Prices CHAPTER 5 SECTION 1: The Price System
Chapter 6: Prices Section 1
Explorations in Economics
PRICES Chapter 5.
Chapter Price 6. Objectives: Students will learn… How the market establishes an equilibrium price How the equilibrium price balances supply & demand How.
Managing Prices. How are price system limitations dealt with? The price systems limitations sometimes lead governments to intervene in the market. Governments.
Explain: how supply and demand Compare: a market in
Price Controls Chapter 6, Lesson Three.
Economics Tic-Tac-Toe. You will chose 3 of the following activities to complete by the end of the period! You have to make a tic-tac-toe with your assignments.
Unit 3 Microeconomics: Prices and Markets
Section 3: What role do prices play in a free market economy?
Chapter 6, Section 2. When the supply or the demand curve shifts, a new equilibrium occurs. Then, the market price and quantity sold move toward the.
Chapter Five: Welfare Analysis. Consumer Surplus.
Chapter 5: Demand and Supply
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