Econ 202 notes Week 4
Econ 202 notes Week 4 ECON 202
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This 2 page Class Notes was uploaded by Leslie Pike on Thursday February 18, 2016. The Class Notes belongs to ECON 202 at Western Kentucky University taught by Dean Jordan in Spring 2016. Since its upload, it has received 14 views. For similar materials see PRIN ECONOMICS-MICRO in Economcs at Western Kentucky University.
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Date Created: 02/18/16
Announcements: Exam 1 to be administered next Thursday, over chapters 1, 2, and 3. There will be no article review this week. You won’t need a calculator. Bring a green scantron. A seller’s side of the market looks just opposite of a buyer’s side of the market. Experiment Dr. Jordan offered to pay any student $10,000 to get up and sing in front of the class. 35 students volunteered. The number dropped as Dr. Jordan dropped the price, until at $5 only one student was willing. In this case, the class was the supplier (supplying the classroom with music). The cost of the suppling was embarrassing yourself in front of the whole classroom. Only one person thought it was worth it to sing for $5; for everyone else in the room, this did not cover the cost of their embarrassment. (He actually was pretty good and didn’t embarrass himself; that’s probably why he was willing to sing for so little. His cost of production was pretty low.) The higher the price, the more producers want to produce. Suppliers must: 1. Have resources to make their product with 2. Profit from producing it 3. Have a definite plan to produce and sell their product The quantity supplied is the amount producers plan to sell at a given time and price. Law of Supply: higher price, higher quantity produced. Lower price, lower quantity produced Marginal cost increases as production increases. Change in supply: influence other than price on selling plan Supply is affected by: Price of factors of production. As they rise, the minimum price suppliers will accept for their product rises Prices of related goods. o A substitute of production can be produced with the same resources, i.e. iPhones and tablets. If the price of tablets dropped, producers would make more iPhones instead o A complement of production is two goods that are produced together, i.e. beef and leather. If the price of hamburgers goes up, so will the price of leather Expected future prices. If prices are expected to rise, companies cut production today and produce more when the price rises If the number of suppliers increases, the number of supplies produced increases (duh) Technology advances can reduce the cost of production, increasing the amount produced Nature: if there’s a hurricane in the golf, the oil companies there shut down Quantity supplied is not the same as supply. An increase or decrease in quantity supplied means moving up or down on the supply curve. An increase or decrease in supply means that the curve itself shifts. The same is true for quantity demanded and demand. A surplus is excess supply, a shortage is excess demand.
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