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ECON 110 - Class Notes - 02.05.08

ECON 110 - Class Notes - 02.05.08 - ECON 110 Class Notes...

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ECON 110: Class Notes 02/05/08 Supply vs. Demand 2 independent concepts that influence each other. Impact if the government increases the cost of producing coal by $1/ton by imposing stricter  safety requirements. This will decrease the supply of coal. A’, B’, C’ are points with higher (increased) costs of production yielding the same  quantity. The entire supply curve shifted up and to the left o Left   decrease If the price is $11/ton, only 100 tons/day will be produced. (Supplied) A decrease in supply means: o B – A’: at the same price producers supply less quantity. o B – B’: at a higher price of $1/ton, the same quantity is supplied. Less always left. More is right. In a competitive world, the market will make sure this happens. Demand Curve Negatively sloped.
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