LESSON 5 WHAT HAPPENS WHEN MARKETS ARE NOT IN EQUILIBRIUM?
Price
Price Ceiling
S
Market-clearing price
Legal price ceiling set
below market price
D
Qs
Qd
Quantity
5-1
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
LESSON 5 WHAT HAPPENS WHEN MARKETS ARE NOT IN EQUILIBRIUM?
Price
Price Floor
S
Legal price floor set
above market price
Market-clearing
price
D
Qd
Qs
Quantity
5-2
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
LESSON 5 WHAT HAPPENS WHEN MARKETS ARE NOT IN EQUILIBRIUM?
Class Activity
• Minimum wage
• Agriculture price
minimums
• Rent control
• “Usury” laws on credit
card loans, setting
maximum interest rates
• Price controls on
gasoline in the 1970s
Instructions:
• Decide whether each is
a price floor or price
ceiling.
• Decide whether
consumers or
producers would favor
the control.
• Produce a market
graph illustrating the
result of this price
control.
5-3
HIGH SCHOOL ECONOMICS 3RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY