Unit 2 review

equilibrium
the point at which quantity demanded and quantity supplied are equal.
surplus
any situation in which quantity supplied exceeds quantity supplied
shortage
any situation in which quantity demanded exceeds quantity supplied
price floor
a government mandated minimum price that must be paid for a good or services
What factors can lead to disequilibrium
Supply or demand has to change to move equilibrium
What role does the government play in determining some prices.
The government can impose a price ceiling or a maximum price that can be legally charged for a good.
What problem can a price floor cause?
Minimum wage can make it difficult for businesses to pay the lowest wage for the most work.
How do prices act as a language in the free market?
Change in price can a consumer whether a good is quality or not.