Download Combining Supply and Demand

Combining Supply and
Demand
Finding Equilibrium
Balancing a Market
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Equilibrium: the point at which quantity
demanded and quantity supplied are equal.
Combined Supply and Demand schedules
allow us to see where quantity supplied equals
the quantity demanded.
Equilibrium can be seen on a graph when we
plot Supply and Demand and look at where
they meet.
Disequilibrium
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Occurs when quantity supplied is not equal to
quantity demanded.
Excess demand: occurs when quantity
demanded is more than quantity supplied.
Excess supply: occurs when quantity supplied
is more than quantity demanded.
The Government.. Again!
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Price Ceiling: a maximum price that can be
legally charged for a good.
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Rent Control: created to prevent inflation in the
1940’s and still can be seen today. Section 8
Housing.
A price ceiling increases the quantity demanded
but decreases the quantity supplied. Since rents are
not allowed to rise, this excess demand will last as
long as the price ceiling holds.
Price Floor
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Price Floor: a minimum price that can be charged for
a good or service.
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Minimum wage: a minimum price that an employer can
pay a worker for an hour of labor; set by government.
A person working full time and getting paid minimum
wage is making less than the federal government says is
necessary to support a couple and one child.
If minimum wage is set above equilibrium the result is a
decrease in employment. There are more people who want
jobs and not enough jobs out there.