Microeconomics Lecture Notes
Microeconomics Lecture Notes Econ 201
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This 3 page Class Notes was uploaded by Kelsey Voelker on Friday September 23, 2016. The Class Notes belongs to Econ 201 at Towson University taught by Professor Baejter in Fall 2016. Since its upload, it has received 6 views. For similar materials see Microeconomics in Economics at Towson University.
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Date Created: 09/23/16
Microeconomics 9/15/16 Using Supply and Demand *print on course documents Working with Demand curves—you’ll learn Info demand schedules and curves give us What they tell us about buyer value What they tell us about any marginal quantity How to find consumer surplus How demand differs from quantity demanded What changes in demand mean, how we show them Terms Efficiency: all the possible mutually beneficial exchanges are made (in an efficient market) o If inefficient: exchanges that would like to have been made cannot be made Price caps are almost always inefficient Law of Demand: at lower prices more will be sold, at higher prices less will be sold o Negative demand slope(slope downwards) o Stores put things on sale to sell more Demand: the amount that one is willing to pay for one more Demand Curves Price, value, cost--anything thought in monetary terms go on vertical axis o The buyers willingness to pay Quantity is always represented on the horizontal axis For any value youit gives you a quantity & for any quantity it gives you a value For any price the quantity demanded is given For any quantity the marginal value is given (the value of the next one) Shows us the buyers Consumer Surplus The difference between what the people in the market are willing today, and what they actually pay for the market price On graph: the area of consumer surplus for all the people in the market the whole top above the price line Quantity demanded Meaningful at some Price Can be increasing or decreasing based on price Demand The whole curve the whole set of the relationships The whole table all the quantities demanded at all the different prices Shift in Demand Up & out is increasing (right & upward) at any price there is an increase at quantity demanded, value has increased down to left is decreasing (left & downward) at any price there is a decrease in quantity demanded (leftward shift), value decreased (downward) Factors that can change Demand (good to memorize): consumer income o if increased demand would increase o there are some goods for which demand would decrease (ex. City bus services) inferior goods Number of consumers o If increases demand would increase Price of a substitute good o If one increases the demand for the other would increase Price of a complementary good o If one price increases the demand of the other would decrease Expected future price o If increased price next week demand this week would go up Demographic changes o As people age demand for elderly homes goes up Consumer preferences (for resources) demanded for a good it is used to produce—called “derived demand” o demand for steel worldwide as people in india and china have moved up to middle income and can afford cars the demand increases o demand for people who make typewriters when computers came about demand went down Questions when the demand for new housing increases what happens to the demand for lumber? Increases when price in a market falls, what should happen to consumer surplus? Increase whats one thing that can cause demand for a good to increase? Number of consumers, etc. if grocery store checkout people become more expensive to hire, what would happen to the demand for self-checkout machines? Increase as gasoline prices come down, what has probably happened to the quantity demanded of gasoline? Increase suppose better technology brings down the price of gasoline, what effect on demand? Stays the same (curve doesn’t move, there is movement along the curve) o as the price of gasoline changes, what happens to the demand? Stays the same o the price lowered can increase the QUANTITY DEMANDED as tens and millions of people in china and india have come out of poverty and are able to buy a car, what would happen to the demand of gasoline? Increase at any price so the whole demand curve shifts *an increase in demand, is an increase in the quantity demanded at EVERY price Working with Supply curves The law of supply everything else being equal at higher prices sellers will sell more supply curve curve of lowest costhighest cost an imaginary lining up of each unit that might be for sale according to the opportunity cost for what is for sale supply curves are cost curves
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