1. 0
0.25
0.5
0.75
1
1.25
1.5
1.75
2
2.25
2.5
2.75
3
0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500
0
0.25
0.5
0.75
1
1.25
1.5
1.75
2
2.25
2.5
2.75
3
0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500
0
0.25
0.5
0.75
1
1.25
1.5
1.75
2
2.25
2.5
2.75
3
0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500
0
0.25
0.5
0.75
1
1.25
1.5
1.75
2
2.25
2.5
2.75
3
0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500

2. Bellringer
1. Find the equilibrium price of 1
loaf of bread
Price Quantity
Supplied
Quantity
DemandedPrice
$ 1.00
$ 1.75
$ 2.25
$ 3.00
300
700
900
1500
$ 0.25
$ 0.50
$ 1.00
$ 2.25
$ 3.00
1500
900
600
400
300
0
0.25
0.5
0.75
1
1.25
1.5
1.75
2
2.25
2.5
2.75
3
0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500
2. Why might a
politician argue this
isn’t a fair price for
large families?

3. Shortage & surplus
0
0.25
0.5
0.75
1
1.25
1.5
1.75
2
2.25
2.5
2.75
3
0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500
D
S
P
Q

4. Price floorsPrice floors – low– low
limit on how lowlimit on how low
a price can goa price can go
Price CeilingPrice Ceiling ––
limit on howlimit on how
high a price canhigh a price can
gogo
Government Solutions!

6. Price CeilingPrice Ceiling
Designed to helpDesigned to help
consumersconsumers
Illegal to chargeIllegal to charge
higher than the pricehigher than the price
Example: RentExample: Rent
ControlsControls
Problems?Problems?
QualityQuality
ShortagesShortages

7. Price CeilingPrice Ceiling
Designed to helpDesigned to help
consumersconsumers
Illegal to charge higherIllegal to charge higher
than the pricethan the price
Example: RentExample: Rent
ControlsControls
Problems?Problems?
QualityQuality
ShortagesShortages
Stossel ClipStossel Clip

10. Price FloorsPrice Floors
Designed to help firmsDesigned to help firms
Illegal to charge lower thanIllegal to charge lower than
the pricethe price
Example: Farmers during NewExample: Farmers during New
DealDeal
Problems?Problems?
EfficiencyEfficiency
SurplusesSurpluses
““subsities” – payments fromsubsities” – payments from
government to businesgovernment to busines

11. Price FloorsPrice Floors
Designed to help firmsDesigned to help firms
Illegal to charge lowerIllegal to charge lower
than the pricethan the price
Example: FarmersExample: Farmers
during New Dealduring New Deal
Problems?Problems?
EfficiencyEfficiency
SurplusesSurpluses
Stossel ClipStossel Clip