today i will evaluate the system of market prices by answering two comprehension questions
TRANSCRIPT
Content ObjectiveToday I will evaluate the system of market prices by answering two comprehension questions.
PriceThe monetary value of a product as established by supply and demand
How do high prices signal buyers?How do low prices signal producers?
Market prices are:Neutral- like a compromiseFlexible- can absorb “shocks”Easy- you know what $50 meansCheap- no cost to administer
Problems with rationingHow could gas be rationed in the US?
How much does rationing cost?Will the system be misused?Would you have incentive to produce?
Without pricesHow does an economy function without prices?Rationing
Govt. decidesCoupons
What are the problems with rationing?
Equilibrium PricePrice determined by supply and demand
Think: What could disrupt an equilibrium price?
Price CeilingsRent control- governments prevent equilibrium pricesMinimum upkeepBest units converted to condos or
officesBusinesses desert the area
What might you do if the building you owned was subject to rent control?
AgricultureTarget prices and deficiency payments
Loan payments or crop harvestGovt. acquired
huge surplus of foodWho gets surplus govt. food?
Land banks
Markets TalkThe stock market is an indicator of good or bad policiesWhat happened
to the stock market when Pres. Obama was reelected?