We will be using Cornell Note Taking
Format Today!
Smile and “Own the Day!
Take one step at a time to
Success in Economics class!
Unit Two: Learning Objectives:
North Clackamas School District
Social Studies Priority Standards:
• HS.51 (A): Explain how supply and
demand represents economic activity
and describe the factors that cause them
to shift.
Lesson Six: Daily Learning Target
I Can define and explain in writing the
following key Economic concepts:
 Equilibrium
 Disequilibrium
 Excess Demand
 Excess Supply
 Price Ceiling
 Price Floor
1. An increase in resource cost results in a(an) decrease
___________in supply of tablets.
2. An increase in # of suppliers results in a(an) _____________in
supply of autos.
increase
decrease
3. A decrease in the number of producers of computers will ___________
the supply of computers
decrease in
4. An increase in the price of wheat results in a(an) __________
supply of the alternative good corn.
increase in supply of of
5. A technological breakthrough results in a(an) _________
broccoli.
6. If oil suppliers expect oil prices to rise dramatically in one month it will
result in a(an) __________
decrease in supply of oil now.
7. A decrease in business taxes will result in a(an) __________
increase in the supply
of a commodity.
8. If the government increases subsidies to milk farmers, it will result in
a(an) increase
________ in the supply of milk.
9. If steel producers have to pay more in worker wages, then the supply of
decrease
steel will __________.
S
D1
P
P
(A)
D
S
P
(B)
D
S1
P
(C) RATNEST (D)
S1
Combining
Supply and Demand
D1
D2
A
“D” for flag
after 9/11
D1
S
B
S
P1
P1
Four Possibilities
D
D
C
S1
S2
$1.85
Q1 Q2
D
S1
$1
Do you notice the point where supply
and demand intersect?
Equilibrium
When creating a demand curve and a supply
curve, there is a point where the curves
intersect. This point is the equilibrium point.
Equilibrium occurs when the quantity
demanded equals the quantity supplied.
A market is stable at equilibrium.
$1200
QS=80
Shortage
QD=160
$300
40
160
Q
$40
QD=10
Surplus
QS=30
$10
10
40
Q
$4
QD=40
Surplus
QS=80
$1
20
80
Q
$800
Shortage
$200
20
80
Q
If a seller has seven donuts on the shelf
at $1 per donut, and consumers only want
seven donuts at that price, then the market
is at equilibrium.
Disequilibrium
A market is at disequilibrium when the
quantity demanded does not equal the
quantity supplied.
If quantity demanded is greater than quantity
supplied, excess demand occurs.
If quantity supplied is greater than quantity
demanded, excess supply occurs.
Low prices encourage consumers. Low
prices can create excess demand.
Excess Demand
Excess demand occurs when the actual price is
lower than the equilibrium price.
Low prices encourage demand.
To fix this problem, prices must be raised.
If every parent wants to purchase this toy
for the holidays, excess demand can occur.
However, if no one is buying, then
excess supply occurs.
Excess Supply
Excess supply occurs when quantity supplied
is greater than quantity demanded.
The actual price is higher than the equilibrium
price.
To fix this problem, prices must be lowered.
The day after Valentine’s Day, consumers
will not pay high prices for
Valentine’s candy.
Price Ceiling
A price ceiling is the maximum price that can be
legally charged for a good or service.
The government interferes with market
equilibrium when it creates a price ceiling.
Rent control is an example of a price ceiling.
Rent control is an example of a price
ceiling.
Price Floor
A price floor is the minimum price that can
be legally charged for a good or service.
The government interferes with market
equilibrium when it creates a price floor.
Minimum wage is an example of a price
floor.
The minimum wage is an example of
a price floor.
Dollar
Price
D
S
QD
QD
QS
E
120 =120
QD=QS
Quantity (units of any good or service)
4
QS & QD (Thousands)
SUPPLY PRACTICE:
 WHEN YOU ARE FINISHED….Skim through Chapter
5 (page 141-147)Answer questions 3-10 (page 147)
on a piece of notebook paper and turn directly into
me today.
THIS CAN BE DONE IN PARTNERS!
 Pick up todays graphing worksheet from me. Work
on this independently. Turn directly into me. I want
to personally check your level of understanding on
these concepts.