Econ 201 Lecture 4 Notes
Econ 201 Lecture 4 Notes ECON 201
Popular in Micro Economics
Popular in Microeconomics
This 3 page Class Notes was uploaded by Samantha Shea on Wednesday September 14, 2016. The Class Notes belongs to ECON 201 at Michigan State University taught by Professor Liedholm in Fall 2016. Since its upload, it has received 4 views. For similar materials see Micro Economics in Microeconomics at Michigan State University.
Reviews for Econ 201 Lecture 4 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: 09/14/16
Lecture 4 Notes 9/14/16 Wednesday, September 14, 12:43 PM • For next time: ○ Read: Chapter 5 ○ Problem Set #1 will be available by Wednesday • Review ○ When the price changes, change in quantity demanded which is a movement along the line = change in quantity demanded ○ Change in demand by taste, income, and price of other product is a shift ○ An increase in the price of Lemon Lime will decrease the quantity demanded of that product. Supply • Amount of the good that w illingand able to sell • Factors that affect quantity supplied ○ Resource price ○ Technology ○ Price of product • Supply curve ○ a graph of the relationship between the price of a good and the quantity supplied ○ Price goes up = increase in quantity supplied • Change in quantity supplied is a movement along the curve • Law of supply-‐quantity supplied of a good rises when the price of the good rises ○ Direct relationship between price and quantity supplied • Change in Supply ○ Resource price § When costs of the price rises, the quantity supplied decreases and the supply curve is shifted to the left ○ Technology ○ Shifts • Price determination in markets ○ The market demand curves shows the amount demanded at every price ○ The market supply curve shows the amount supplied at every price the supply curve is shifted to the left ○ Technology ○ Shifts • Price determination in markets ○ The market demand curves shows the amount demanded at every price ○ The market supply curve shows the amount supplied at every price ○ The question now is whether there is some price at which the quantities supplied and demanded are the same • Equilibrium price ○ A price at which quantity supplied equals quantity demanded ○ At the equilibrium price there is no net tendency for price to change • Excess supp-‐a situation in which quantity supplied is greater than quantity demanded ○ Lower the price • Excess demand-‐a situation in which quantity demanded is greater than quantity supplied ○ when there is excess demand for a good, price will tend to rise ○ Ex. If the quantity demand exceeds the quantity supplied of Lemon Lime, then there is a shortage and its price will rise • Economists are interested in the equilibrium price • Demand for snickers bars 2016 Econ 201 $/Bar D DW M S T All (Demand) Supply .25 8 4 15 8 4 39 39 .20 15 8 20 10 5 58 39 .15 25 12 30 15 6 88 39 .10 80 16 45 20 8 169 39 .05 100 20 50 30 10 210 39 ○ Equilibrium price would be $0.25 ○ How can the price of Snicker Bars change? § Only if there is a change in supply, or if there is a change in demand • Changes in demand can be caused by: ○ Changes in consumer incomes ○ Changes in prices of substitutes ○ Changes in prices of complements ○ Changes in tastes • Change in supply can be caused by: ○ Changes in prices of inputs ○ Changes in technology • Demand shift-‐direct relationship between shift direction and price • Supply shift-‐inverse relationship between supply shift and price • Change in supply can be caused by: ○ Changes in prices of inputs ○ Changes in technology • Demand shift-‐direct relationship between shift direction and price • Supply shift-‐inverse relationship between supply shift and price
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'