The document discusses supply and demand for apples and the impact of price ceilings and floors. It explains that a price ceiling set below the market price will result in increased demand but decreased supply, leading to a shortage. A price floor set above the market price will result in increased supply but decreased demand, leading to a surplus.

1. When Supply MeetsWhen Supply Meets
DemandDemand

2. CS
PricesofApples
Quantity in tons of Apples
50 100 150 200 250 300 350 400 450 500
.10.15.20.25.30.35.40.45.50
D
S
D1
P
Q
PC
Shortage
PF
Surplus
P1
Q1
The federal governments price
ceiling is set below the market
price. As a result, buyers
demand more at the lower price,
and sellers are willing to sell less
at the lower price. This results
in a shortage of apples.
The federal governments price
floor is set above the market
price. As a result. Sellers will
be willing to sell more and
buyers will be willing to buy
less. This results in a surplus
of apples.

3. Assume you go into a store and buy a pack of delicious French
Onion flavored Sun Chips. The chips cost you $1.00. You love
them so much you would have been willing to $2.00. The difference
between what you paid and what you would have been willing to
pay is consumer surplus (CS). At this price you got a good deal!
Why is consumer surplus important? When markets create consumer
surplus, many consumers buy the good for less than they would be
willing to pay. Consumers like this because they are getting a deal!
Producers dislike it because they know some people would be willing to
pay more.
Ex. Shoes at Nordstrom's
Buying a used car

4. *If the price consumers pay increases, consumer surplus decreases*If the price consumers pay increases, consumer surplus decreases
.30
.35
.40
.45
.25
.20
.15
50 100 150 200 250
P
Q (in millions)
D
S
S
Why is consumer surplus important? When markets create consumer
surplus, many consumers buy the good for less than they would be
willing to pay. Consumers like this because they are getting a deal!
Producers dislike it because they know some people would be willing to
pay more.
Ex. Shoes at Nordstroms
Buying a used car

5. CS
PricesofApples
Quantity in tons of Apples
50 100 150 200 250 300 350 400 450 500
.10.15.20.25.30.35.40.45.50
D
S
D1
P
Q
PC
Shortage
PF
Surplus
P1
Q1

6. Now you Try…Now you Try…
Use the information you just learned to see how supplyUse the information you just learned to see how supply
and demand works with gumballs.and demand works with gumballs.
First plot your graph given the information. (1-7)First plot your graph given the information. (1-7)
Next answer the questions on your worksheet. (A-E)Next answer the questions on your worksheet. (A-E)
Higher-Order Thinking Question:Higher-Order Thinking Question: Finally, createFinally, create
your own scenario. In your scenario, explain theyour own scenario. In your scenario, explain the
aspects of demands and price floors and ceilings.aspects of demands and price floors and ceilings.

7. Let’s Go to SchoolLet’s Go to School
You have just been given a packet that contains 5 differentYou have just been given a packet that contains 5 different
documents. You will analyze each document and answer thedocuments. You will analyze each document and answer the
questions listed in the packet.questions listed in the packet.
We will discuss the final portion of the assignment together!We will discuss the final portion of the assignment together!
-I will model Document A.
-We will do Document B together.
-The finally 3 documents will be done individually.

8. Homework AssignmentHomework Assignment
Individually:Individually:
•You will research the college of your choice.You will research the college of your choice.
•Find the tuition for the 2010-2011 year.Find the tuition for the 2010-2011 year.
•Find the tuition for the 2014-2015 year.Find the tuition for the 2014-2015 year.
•Consider your research & the documents before you answer the prompt.Consider your research & the documents before you answer the prompt.
•Answer the prompt and cite at least 3 documents.Answer the prompt and cite at least 3 documents.
The written portion will:The written portion will:
1)Be at least 1-page.
2)Answer all components of the prompt.
3) Parenthetically cite at least three documents.