PowerPoint 5 Unit 2 Economics Microeconomics: Supply and Demand

Essential Question Explain the Law of Supply and how changes in our society result in shifts in producer’s willingness and ability to provide goods and services. Give specific examples of real world events that would result in shifts in supply for particular products. Write down only the words in yellow BUT answer both questions in your summary

Market Equilibrium Equilibrium Price – price where quantity demanded = quantity supplied Equilibrium Quantity – quantity where quantity demand =quantity supplied at the equilibrium price

Equilibrium https://www.youtube.com/watch?v=7eZcPs9z9OA 4:50

Rationing Function of Prices Definition: the ability of the competitive forces in the market to bring the market to equilibrium

Rationing Function of Prices https://www.youtube.com/watch?v=njTKa-dnJPo 5:36

Price Floors and Ceilings https://www.youtube.com/watch?v=XgBPAucs-W4

Changes in Market Equilibrium https://www.youtube.com/watch?v=NgPqyM3I_8o Draw a few if the graphs on your paper 9:04

Surplus When quantity supplied > quantity demanded (occurs at prices above equilibrium)

Consumer and Producer Surplus https://www.youtube.com/watch?v=n0LXkA9kato 5:04

Shortage When quantity demanded > quantity supplied (occurs at prices below equilibrium)

Market Equilibrium 200 Buyers & 200 Sellers P Qd P Qs Market Demand Supply 200 Sellers 6 5 4 3 2 1 6,000 Bushel Surplus S P Qd P Qs $5 4 3 2 1 2,000 4,000 7,000 11,000 16,000 $5 4 3 2 1 12,000 10,000 7,000 4,000 1,000 $4 Price Floor Price (per bushel) 3 $2 Price Ceiling 7,000 Bushel Shortage D 2 4 6 8 10 12 14 16 18 7 Bushels of Corn (thousands per week)

Essential Question Answer both questions in your summary Explain the Law of Supply and how changes in our society result in shifts in producer’s willingness and ability to provide goods and services. Give specific examples of real world events that would result in shifts in supply for particular products. Answer both questions in your summary