January 20 2017
Excess Demand
Excess Demand
Excess demand: quantity demanded is greater than quantity supplied (shortage). Ex: flu shots at Walgreen's
Shortage: consumers can't get quantity of items they desire
Equilibrium: Point at which supply/demand curve intercept
Price ceiling: occurs when government puts a legal limit on how high the price of a product can be. (must be set below the equilibrium mark to be efficient)
Excess supply: quantity supplied is greater than quantity demanded (surplus)
Surplus: when the producers have inventory they can't get rid of.
Price Floor: Lowest legal price a commodity can be sold at. (Used by government to prevent prices from becoming too low) ex: minimum wage.
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