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Econ Ch 4-5 February 2, 2015

Posted by OromianEconomist in Economics, Uncategorized.
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‘Money flows clockwise and goods flow counterclockwise.’

Pepperdine Summary Notes

Money flows clockwise and goods flow counterclockwise.

Equilibrium is the point at which the demand and supply curve meet. If the market price is above this, there is a surplus. If it is below there is a shortage. Eventually the shortage and surplus will decrease and go back to equilibrium.

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When there is a shortage, consumers bid the price up to comet for goods until the price goes back to equilibrium.

An increase of demand causes a shortage until equilibrium is reached at a higher price and quantity.

1

When there is a decrease in demand, there is a surplus. The excess goods decrease the price until a new equilibrium is reached.

2

A shift in supply and and demand causes a change in the quantity and price. One is always the indeterminate.

3

Price ceiling:

4A price ceiling sets the maximum price that can be charged for a good, like rent control…

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