short-run versus long-run  

• long run lets consumers/producers fully adjust to price change
• demand - more price elastic in long run
  • consumers adjust habits over time
  • linked to another good that changes over time, more substitutes available later (knock-offs, competition)
  • short term - durable goods >> consumers hold onto >> no need to replace >> less demand
  • no new purchases >> less consumption in short run
  • over long term, will still need to be replaced >> more elastic
• supply - percentage change in quantity supplied due to price change
  • same concept as demand elasticity
  • materials shortage >> bottlenecked production >> low elasticity (capacity constraint)
  • easy to get capital/labor/materials >> high elasticity (long run pattern)
  • durable goods >> can be refabricated >> smaller long-run elasticity

price controls - price ceiling/minimum set by organization (usually gov’t) 

• ceiling below equilibrium >> excess demand
  • normally, suppliers would raise money, but can’t in this situation
  • could drive price above market price (ceiling) through auction, bribes
• minimum (floor) below equilibrium >> no effect
• ceiling above equilibrium >> no effect
• minimum (floor) above equilibrium >> excess supply
• excess demand - difference in quantity of demand and quantity of supply, calculated at the price ceiling

• price ceiling
• equilibrium can't be reached
• at price ceiling, quantity demanded exceeds quantity supplied
• suppliers not allowed to raise prices (legally)

• price floor
• equilibrium can't be reached
• at price floor, quantity supplied exceeds quantity demanded
• suppliers can't lower prices