Supply & Demand Graphs
- Equilibrium: Point at which the supply curve intersects with the demand curve
- Excess Demand: Occurs when… Quantity Demanded > Quantity Supplied
- This will result in a shortage
- Shortage: Consumers can’t get quantities of items they want
- Price Ceiling: Creates shortage
- When government puts a legal limit on how high the price of a product can be.
- Ex) Rent control
- Excess Demand: QD > QS
- Excess: Occurs when quantity supplied is greater than quantity demanded.
- Results in surplus
- Surplus: Producers have inventories they can’t get rid of.
- Price Floors:
- Created
- Lowest legal price a commodity can be sold at
- Government uses to prevent prices from becoming too low
Excess Supply: QS
> QD
Online Resource: https://www.mindtools.com/pages/article/newSTR_69.htm
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