Class Notes - 9-14-07

Class Notes - 9-14-07 - o The number of units exchanged is...

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Macroeconomics – Class Notes – 9/14/07 HELD CONSTANT ALONG DEMAND CURVE Income Prices of Related Goods Expectations of buyers Numbers of Buyers Price of Substitute rises SUPPLY Schedule showing quantities of a good that sellers are willing and able to supply, other things equal . Law of Supply – As the price increases, the supply also increases (positive relationship) HELD CONSTANT ALONG SUPPLY CURVE Prices of Resources Technology Expectations of Producers Number of Producers Weather INCREASE IN SUPPLY Resource Prices Falls Technology Advances Producers Expect Goods Price to Fall Number of Producers Rises EQUILIBRIUM FOR PIZZA MARKET Price Quantity Demanded Quantity Supplied 20 0 20 15 5 15 10 10 10 5 15 5 0 20 0
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10 is the equilibrium price where quantity demanded = quantity supplied – this is the equilibrium point When DEMAND is the LIMITING FACTOR!
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Unformatted text preview: o The number of units exchanged is only as much as the maximum number of units demanded o Surplus When SUPPLY is the LIMITING FACTOR! o The number of units exchanged is only as much as the maximum number of units supplied o Shortage ANALYZING CHANGES IN EQUILIBRIUM Step #1: Which Curve Shifts? Step #2: Left or Right? Step #3: What happens to P(equil.) and Q(equil.) Its good to draw out your supply and demand curves Perfectly Elastic Horizontal Demand or Supply Perfectly Inelastic Vertical Demand or Supply Steep in slope Highly inelastic Very flat Highly Elastic OPERATING DEFICIT FOR NYC SUBWAY (Total Revenue) (Total Cost) = $24 Million 24.5 million (Total Revenue) (Total Cost) = - $0.5 million...
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This note was uploaded on 04/15/2008 for the course ECON 101 taught by Professor Golden during the Fall '07 term at Allegheny.

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Class Notes - 9-14-07 - o The number of units exchanged is...

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