Econ11Fall2007NotesForLecture_5Sept19

Econ11Fall2007NotesForLecture_5Sept19 - Lecture V Notes For...

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Lecture V Notes For Sept 19, 2007, Prob Set #1 Due, #2 Distributed Using Market Equilibrium to Solve Economic Problems I. Determination of Equilibrium Price in a Market II. Implications of S&D: Don’t Confuse Problems with Solutions IV. Effects of Shifts in Market Demand &/or Supply V. Effects of a Price Ceiling or Floor I. Determination of Equilibrium Price in a Market A. Goldilocks and the 3 price levels. ..high, low, just right B. How firms spot excess supply and demand 1. If inventory is rising, cut price Q D < Q S 2. If inventory is falling, raise price Q D > Q S 3. If inventory constant, maintain price Q D = Q S C. From firm supply to market supply: adding horizontally II. Implications of S&D: Don’t Confuse Problems with Solutions A. Is fever a problem or a solution? 1. Fever is NOT the disease it is the way our bodies try to fight the disease! B. Farmers have a very good growing season but the price of crops falls and farm income declines. Is this a problem or a solution? C. There are lots of unsold SUV's at the end of the model year.
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Econ11Fall2007NotesForLecture_5Sept19 - Lecture V Notes For...

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