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Class Notes - 9-14-07

Class Notes - 9-14-07 - • Results in disequilibrium o...

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Microeconomics – Class Notes – 9/14/07 A. Change in Demand a. Increased in Demand i. Increase in Price, ii. increase in Quantity b. Decrease in Demand i. Decrease in Price ii. Decrease in Quantity B. Change in Supply a. Increase in Supply i. Decrease in Price ii. I C. Both Curves Change a. 2 “other things” change simultaneously i. Know either change in price or change in quantity, but not both ii. One change will be ambiguous. b. Example i. Price of a substitute increases ii. The number of firms decreases iii. Graph these separately VI. Market Interference
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Unformatted text preview: • Results in disequilibrium o Price controls: Government regulation that sets or limits the price of a good. A. Price Ceiling: Sets a maximum price a. An effective price ceiling is below equilibrium. b. The quantity supplied is less than quantity demanded: Shortage i. Example: Rent controls B. Price floor: Sets a minimum price a. An effective floor: Above equilibrium i. Example: Agricultural Price supplements 1. Quantity Demanded < Quantity Supplied: Surplus b. Minimum Wage...
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