Lecture 5 Supply - ©2007 John M Abowd all rights reserved M i c r o Supply& Demand Prof John M Abowd ©2007 John M Abowd all rights reserved M

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Unformatted text preview: ©2007 John M. Abowd, all rights reserved M i c r o Supply & Demand Prof. John M. Abowd September 10, 2007 ©2007 John M. Abowd, all rights reserved M i c r o Important Reminders ◆ All help questions must now be posted to the class discussion list. ◆ Required assignment preparing for the price and quantity experiments is due tomorrow. If you are participating in the experiment at 8:00pm tomorrow because of Rosh Hoshanah, make sure to do the preparation assignment before 7:30pm. ◆ In section this week, you attend by logging onto Aplia.com (from anywhere you wish) to participate in the experiment designated for your section. KNOW YOUR SECTION NUMBER. ◆ Chapter 3 problem set and the Internet music market assignment are due on Friday. ©2007 John M. Abowd, all rights reserved M i c r o Themes of Today’s Lecture ◆ Supply ◆ Demand ◆ Equilibrium prices and quantities ◆ Equivalent verbal, tabular, graphical, and mathematical forms ©2007 John M. Abowd, all rights reserved M i c r o Supply and Demand ◆ The supply and demand model is the workhorse of economics. ◆ We will consider each of its pieces. ◆ Then, we will use it to answer some basic questions. ©2007 John M. Abowd, all rights reserved M i c r o The Supply Curve (Verbal) ◆ The supply curve describes the positive relation between the price of a good and the maximum quantity that producers are willing to sell at that price. ◆ Example: when the price of a good falls from 25 to 10 , the quantity supplied falls from 31 to 16 . ©2007 John M. Abowd, all rights reserved M i c r o Increase in Supply ◆ When supply increases, the quantity supplied by producers increases at every price. ◆ Example: when supply increases, the quantity supplied at a price of 25 rises from 31 to 36 . ©2007 John M. Abowd, all rights reserved M i c r o Decrease in Supply ◆ When supply decreases, the quantity supplied by producers falls at every price. ◆ Example: when supply decreases, the quantity supplied at a price of 25 falls from 31 to 21 . ©2007 John M. Abowd, all rights reserved M i c r o The Supply Curve (Table) ◆ The quantity supplied is an increasing function of the price, as the table to the right illustrates....
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This note was uploaded on 02/14/2008 for the course ECON 1110 taught by Professor Wissink during the Fall '06 term at Cornell University (Engineering School).

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Lecture 5 Supply - ©2007 John M Abowd all rights reserved M i c r o Supply& Demand Prof John M Abowd ©2007 John M Abowd all rights reserved M

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