Week 4-6 Notes
Week 4-6 Notes Ag_Econ 1041
Popular in Applied Microeconomics
Popular in Agricultural & Resource Econ
This 3 page Bundle was uploaded by Sarah Dweik on Tuesday October 6, 2015. The Bundle belongs to Ag_Econ 1041 at University of Missouri - Columbia taught by Harvey James in Spring 2015. Since its upload, it has received 52 views. For similar materials see Applied Microeconomics in Agricultural & Resource Econ at University of Missouri - Columbia.
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Date Created: 10/06/15
O 09 O 0 881116 0 66 Producers look at the market gt If the price is too low don t sell gt If the price is high then you sell I Sell at market price I Difference in prices is producer surplus A market clears when the price of the product is available for all consumers is the gt No shortage or surplus Price ceiling and price oor gt The government pushes the price lower or higher I Too low creates shortages I Too high creates surpluses If the price oor is below the equilibrium price nothing will happen gt This is because the equilibrium price is above the price oor which makes it irrelevant If price ceilings are below the equilibrium price then shortages will happen gt More consumers will buy the product and producers won t want to make as much of it Consumer surplus gt The difference between the price consumers will be willing to pay and the market price Elastic gt Means that something is responsive Inelastic gt Non responsive gt Doesn t change If there is a large change in the price and the quantity of the product sold doesn t change means that there is an inelastic demand 0 66 gt Means that it is non responsive A large change in the price and a large change in the quantity of the product sold means that there is an elastic demand 0 66 gt Means that it is responsive Ed change in quantitV change in price 0 66 O 6 Characteristics of inelastic markets gt Strong affinity gt Essential necessary gt Few substitutes gt Low price Characteristics of elastic markets gt Substitutes gt High price gt Not necessary gt Luxury 9 99 99 99 99 99 99 0 00 0 00 0 00 When the price of the good changes the quantity changes Nominal price is the price everyone sees and pays Real price takes income and the prices of other products into consideration Price affects the quantity demanded but not the demand Price does not affect demand Equilibrium is where there is no surplus or shortages gt This affects markets Prices of compliments have an inverse relationship gt If the price of something goes up the price of something that goes with it goes down I Think of milk and cereal
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