1. PowerPoint 5 Unit 2 Economics
Microeconomics: Supply and Demand

2. 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

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

4. Equilibrium
4:50

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

6. Rationing Function of Prices
5:36

7. Price Floors and Ceilings

8. Changes in Market Equilibrium
Draw a few if the graphs on your paper
9:04

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

10. Consumer and Producer Surplus
5:04

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

12. 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 7
Bushels of Corn (thousands per week)

13. 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