This document summarizes the concepts of supply and demand economics, including: 1) Equilibrium is reached at the price where quantity supplied equals quantity demanded. This is shown as the point where the supply and demand curves intersect on a graph. 2) Disequilibrium occurs when quantity supplied does not equal quantity demanded, resulting in either excess demand or excess supply. 3) Excess demand happens when demand is greater than supply, which can be resolved by suppliers raising prices to encourage less demand. Excess supply is when supply exceeds demand, which may lead to lower prices to boost demand.

1. Combining Supply and Demand Economics 1

2. Balancing the Market Demand shows how much consumers are willing to buy at various prices Supply shows how much sellers are willing to sell at various prices This will give us a common ground! AKA Equilibrium!!!!

3. Equilibrium The point where demand and supply come together at the same point or number Point of balance between price and quantity The market for a good is stable at equilibrium Look for the price at which the quantity supplied equals the quantity demanded What does your picture look like?!

4. How to Graph this… Equilibrium is shown in a supply and demand graph Can be found where quantity supplied equals quantity demanded, or the point where the supply curve crosses the demand curve

5. Disequilibrium This occurs when quantity supplied is not equal to quantity demanded It can either cause excess demand or excess supply

6. Excess Demand What does your picture look like?! This occurs when quantity demanded is more than quantity supplied A low price encourages buyers and discourages sellers! This problem can be fixed by suppliers raising the price of a good

7. Excess Supply This occurs when quantity supplied exceeds quantity demanded=too many goods! Can lead to lower prices in order to encourage stronger demand for a good Remember! Companies still want their money!

8. Price Ceilings This is a max price, set by the gov’t, that sellers can charge for a good or service Usually put on goods that could become too expensive Rent Control-helps people live in neighborhoods that they otherwise could not afford…ex. San Francisco!

9. Price Floors This is a minimum price, set by the gov’t, that must be paid for a good or service Minimum Wage-the lowest a worker can be paid How can this lead to unemployment though?! This is good for farmers though!

10. Changes in Equilibrium Chapter 6 Section 2 p.133 Surplus Shortage Search Costs How are the graphs that show the change in demand and supply different from what you already know?! Complete the Section 2 Assessment 1-5