UNIT 1: business cycle & price ceiling/floor

• Equilibrium- is the point at which the supply curve & demand curve intersect:

• excess demand- when quantity demand is greater than quality supplied. results in shortage.
• shortage- consumers cannot get enough of the quantities they desire.
• price ceiling- creates a shortage. occurs when the government puts a legal limit on how high the price of a product can be.

• excess supply- supply is greater than demand
• price floor- lowest legal price something can be sold for. prevents prices from becoming too low. 
• business cycle:
• 1 cycle is from trough to trough
• average cycle is 5-7 years
• recessions last about 14 months
• peaks and troughs are meaningless because we usually don't notice until it's over 
• trough is the end of a recession
• if the recession takes more than 10 of the CPP, than it is a depression