good never causes the demand or supply curve for that good to shift.

Think carefully about the timeline of events: What happens first, what happens next? What is cause, what is effect?

If you keep the order right, you are more likely to get the analysis correct.

In the four-step analysis of how economic events affect equilibrium price and quantity, the movement from the

old to the new equilibrium seems immediate. As a practical matter, however, prices and quantities often do not

zoom straight to equilibrium. More realistically, when an economic event causes demand or supply to shift,

prices and quantities set off in the general direction of equilibrium. Even as they are moving toward one new

equilibrium, a subsequent change in demand or supply often pushes prices toward another equilibrium.

3.4 Price Ceilings and Price Floors

LEARNING OBJECTIVES

By the end of this section, you will be able to:

• Explain price controls, price ceilings, and price floors
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