Week 6 Notes
Week 6 Notes ECN 222 - 005
Popular in Macroeconomics
Popular in Economcs
This 4 page Class Notes was uploaded by Abigail Johnson on Sunday February 21, 2016. The Class Notes belongs to ECN 222 - 005 at University of North Carolina - Wilmington taught by Adam Talbot Jones in Spring 2016. Since its upload, it has received 20 views. For similar materials see Macroeconomics in Economcs at University of North Carolina - Wilmington.
Reviews for Week 6 Notes
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 02/21/16
2/21/16 4:48 PM MONDAY FEB 15 What causes surpluses/shortages? • Market changes faster than equilibrium has moved • Floors and Ceilings can cause these • Binding price floor à surplus • Binding price ceiling à shortage Price floor picture • Minimum wage: move from $7 to $15 an hour. o Pro: not in poverty anymore § QD(workers who keep jobs with pay raise) win • Con: more people are willing to work for 15/hr than 7/hr. This difference is a surplus of labor (i.e., unemployment) o Q -0 (Dob losses) lose • QD= hired at $15/hr • Q = original equilibrium 0 • Qs= those willing to work at 15/hr • Q0-Q Dloss of jobs (entry level jobs are mostly lost) Price ceiling picture • Gasoline Market • Equilibrium is $2, Ceiling is $1 (new law)à shortage • Pros: those who can get gas win • Cons: oil companies lose, those who can’t get gas lose • Q = demand at only $1 D • Q0= original equilibrium • Qs= supply at only $1 • Q -Q = true loss from equilibrium 0 D • QD-Q S shortage Shortageàrationing 1. Long lines- first come first served 2. Discrimination according to sellers’ biases/preferences (connected individuals) • Inefficient: goods do not necessarily go to the buyers who value them most highly • Let prices change: the rationing mechanism is efficient, potentially not fair (or equitable) Changes in equilibrium (3-Steps) • Does Demand or Supply shift at all? Which one or both? • Which way does the curve shift? • Draw in new S&D lines and see what happens to price and quantity (plus new equilibrium point) [Price increase/decrease; Quantity increase/decrease] **Go through the 3-step process for any given problem BEFORE looking for the answer. Graph of D&S combinations WEDNESDAY FEB 17 Retake times (form to sign-up on BB): Wed 5, 8pm CH 212 Thursday 8am CH 231, 3:30pm CH 212 Friday 1pm CH 212 Monday 8am CH 211 Use the 3-step method to analyze the effects of each event on the equilibrium price and quantity of music downloads. 1. Event A: A fall in the price of CDs • Demand • Demand shifts left (decrease) • decrease price, decrease quantity 2. Event B: Sellers of music downloads negotiate a reduction in the royalties they must pay for each song they sell. • Supply • Supply shifts right (increase) • Decrease price, increase quantity 3. Event C: Event A & B both occur. • Price decrease, quantity ? Use the 3-step method to determine the cause of each: 1. Gas prices over last 8 months; Pdecrease, Qincrease • supply increase 2. Gas prices in the summer; Pincrease, Qincrease • demand increase 3. Tickets to superbowl; Pincrease, Qsame • supply ? (technically), demand increase • supply is fixed Ch. 10 (Measuring a Nation’s Income) GDP: measures total income of population • Also measures total expenditure • Income = expenditure (Every dollar a buyer spends is a dollar of income for the seller) Income doesn’t = happiness, but it can buy other rewarding aspects of life Gross Domestic Product: The market value of all final goods and services produced within a country in a given period of time • Market Value: the weighted value of individual products within a market (dollars) o Anything without a “market value” is not included • Final: the end user, last person to buy the good, the true “consumers” o Assumption that the final good includes the price/cost/value of any intermediate goods (inputs) • Goods: physical, tangible items • Services: intangible items (phone service, dry-cleaning, etc.) • Produced: includes currently produced goods (annual, fiscal, etc.), not produced in the past • Within a Country: within the borders of a given country. Physical. • In a Given Period of Time: usually yearly or quarterly (3 months) Consumers (C) + Firms/Investments (I) + Government (G) [Exports- Imports (NX) net exports] = Y (GDP ) US Y=C+I+G+NX • Consumption: total spending by households on goods and services o Exception: housing costs § Renters: rent payment § Homeowner: imputed rental value (“as if” renting the home), not purchase price or mortgage payment.
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'