Principles of Macroeconomics
Principles of Macroeconomics ECON 1010
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This 3 page Class Notes was uploaded by Hallie Kuphal on Wednesday October 28, 2015. The Class Notes belongs to ECON 1010 at University of Wyoming taught by Benjamin Cook in Fall. Since its upload, it has received 13 views. For similar materials see /class/230361/econ-1010-university-of-wyoming in Economcs at University of Wyoming.
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Date Created: 10/28/15
ECON 1010 Principles of Macroeconomics Ben Cook Analyzing Changes in Equilibrium Shifting Supply amp Demand Steps for AnalVZing Shifts in Demand Shifts in Supply Changes in Equilibrium buyers decisions sellers decisions Decide Whether the eVeht Shlf39ts the Changes in the Prices Changes in Input 1 supply curve or the demand curve or of Other Good Prices perhaps both Changes in Technology Changes In Income 2 Decide which direction the curve shifts 0f PrOduCtIVItY Changes in Tastes or Use the supplyanddemand dIagram to Preferences see how the shift changes equilibrium Changes in the Changes In PopulatIon Number of Firms Changes in Changes in Expectations Expectations What Happens to Equilibrium When Both Supply and Demand Shift No Change in Supply An Increase in Supply A Decrease in Supply No Change in Stetthe 539 the M DQWH P i Up Demand Quantity Stay the Same Quantity up u a nitit T Db wh Price Ambiguous Price Up An Increase In M UP It Depends Demand Quantit I Up Quantlty Amblguous L39 Quantity Up It Depends Price Down rice Ambjguous Quantity llt wands ItDep ds Quantity own Price Do Wn A Decrease in Demand I Q Uantity Dawn o Ifthe change is Ambiguous the answer depends on which curve has a relatively larger shift 0 Get out some scratch paper and practice drawing out the graphs shifting curves and shifting one curve the same distance or having on curve shift relatively larger ECON 1010 Principles of Macroeconomics Ben Cook An Increase in Demand Demand Curve Shifts Right Change Increase in the Price of a Substitute Reason for Shift Consumers buy lessof the substitute and more of this good Decrease in the Price of a Compliment Consumers buy more of the complimentary good and thus more of this good Increase in Income and the good is a normal good Consumers spend more of their higher income on the good Increase in Taste for the Good Consumers have a higher taste for the good and want more of good at every price Increase in Population Additional consumers in the market result in greater overall demand for the good Increase in the Expected Future Price ofthe Good Consumers buy more the good today in order to avoid the higher price in the future A Decrease in Demand Demand Curve Shifts Left Change Decrease in the Price of a Substitute Reason for Shift Consumers buy more of the substitute and less of this good Increase in the Price of a Compliment Consumers buy less of the complimentary good and thus ess of this good Decrease in Income and the good is a normal good Consumers have less money to spend on all goods Decrease in Taste for the Good Consumers have a lower taste for the good and are not as willing to buy the good at every price Decrease in Population Fewer consumers in the market result in a lower demand at every price Decrease in the Expected Future Price ofthe Good Consumers buy less of the good today in anticipation of saving money by purchasing at a lower future price ECON 1010 Principles of Macroeconomics Ben Cook An Increase in Supply Supply Curve Shifts Right Change Reason for Shift Reduced costs allow the producers to supply more ofthe Decrease In the CostsPrice of Production Inputs product at every price Producer becomes more efficient and can produce more Increase in Technology or Productivity goods with the same resources similar to lower input costs and therefore supplies more goods at every price More firms producing means that there are more goods Increase in the Number of Firms Producing a Good available for purchase at every price If producers believe the future price will fall they will want Decrease In the Expected Future Price ofthe Good to sell more goods today at the higher price A Decrease in Supply Supply Curve Shifts Left Change Reason for Shift Increased costs force roducers to supply less of the Increase in the CostsPrice of Production Inputs p product at every price Producer becomes LESS efficient and produces fewer Decrease in Technology or Productivity goods with the same resources similar to higher input costs and therefore supplies LESS goods at every price Fewer firms producing means that there are fewer goods Decrease in the Number of Firms Producing a Good available for purchase at every price lf producers believe the future price will RISE they will Increase in the Expected Future Price ofthe Good holdoff supply to sell goods later at the higher price
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