Shifts in supply, demand, and both supply and demand
non binding price floor range
(0, eq)
non binding price ceiling range
(eq , infinity)
binding price floor range
(eq, infinity)
black market
A market in which price-controlled goods are sold at an illegally high price
price ceiling
A maximum price that sellers may charge for a good, and sets by government.
Price Floor
A minimum price below which exchange is not permitted. Transactions made at prices below the price floor are illegal
price ceiling set above the equilibrium point vs set below the eq point
A price ceiling that is set below the market equilibrium price results in a shortage. A price ceiling that is set above the market equilibrium price has no effect on the market.
If at the same time Both Demand and Supply Decrease
Change in equilibrium price is indeterminate Equilibrium quantity decreases
If at the same time Both Demand and Supply Increase
Change in equilibrium price is indeterminate Equilibrium quantity increase
If at the Same Time Demand Decreases and Supply Increase
Equilibrium price decreases The change in the equilibrium quantity is uncertain without more information
If at the Same Time Demand Increases and Supply Decrease
Equilibrium price increases The change in the equilibrium quantity is uncertain without more information
black markets might arise due to
The effects of price ceilings below the market equilibrium price results in a shortage
binding price ceiling range
[0, eq )
a decraese in supply is represented on the graph by
an inward shift left
a decrease in demand is re[resented on the graph by
an inward shift left
an incraese in supply is represented on the graph by
an outward shift right
an increase in demand is represented on the graph by
an outward shift right
equilibrium quantitiy when only demand decreases
eq quantity decreases
equilibrium quantity when only supply increases
it goes up
equilibrium price when only demand decreases
price goes down
equilibrium price when only supply increases
price goes down
equilibrium price when only supply decreases
price goes up
equilibrium price when only demand increases
price increases
equilibrium quantity when only supply decreases
quantity goes down
equilibrium quantiity when only demand increases
quantity increases
price floor set above eq vs price floor set below
set above will lead to shortage set below will casue no effect
