Page 10 - E-NOTE

INCREASE IN SUPPLY

• SHIFT TO THE RIGHT

• DUE TO INCREASE NO. OF SELLER

• MARKET SURPLUS
• EQUIL P DECREASE Q INCREASE

DECREASE IN SUPPLY

• SHIFT TO THE LEFT

• DUE TO INCREASE IN PRICE OF INPUT
• MARKET SHORTAGE

• EQUIL P INCREASE Q DECREASE

PRICE CEILING

• TO PROTECT THE WELFARE OF CONSUMER

• GOV THINK PRICE TOO HIGH; FESTIVAL SEASON
• ADV: THE PRICE IS AFFORDABLE, CONTROL INFLATION

• DISADV: CREATE SHORTAGE OF PRODUCT; ILLEGAL OR BLACK MARKET

PRICE FLOOR

• MINIMUM LEGAL PRICE SET BY GOVERNMENT ABOVE THE EQUILIBRIUM
PRICE

• TO PROTECT THE WELFARE OF PRODUCER

• GOV THINK PRICE TOO LOW; FESTIVAL SEASON
• ADV: RAISE SELLERS’ INCOME

• DISADV: UNFAIR TO CONSUMERS AND WASTE OF RESOURCES