eco4 - Three steps to getting through Economics 1) Decide...

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1/23/08 Supply and Demand together Lets use “ “ to represent the number of ice cream cones buyers are willing to buy at price P When , we call that a shortage Example: Dave wants a 30ft Hinckley sailboat (1982, sail-ready, keel, helm, steering, 30hp motor, new U/K brand sails and rigging) cost approx. $50,000. The company does not have any in stock right now. Is there a shortage? *shortage only occurs when the buyer is ready to buy right then. The answer is no because he does not have the money out and ready to buy the boat right then and there. Buyers raise the “bid price” Example: Tickets to a football game; dinner at a fancy restaurant with no reservations As buyers decide to pay more for goods, sellers realizes that he can put more product on the shelf to reduce the shortage Not all sellers will lower their asking price As price decreases, new buyers are attracted
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Unformatted text preview: Three steps to getting through Economics 1) Decide which curve(s) is/are moving 2) Determine which way they are moving 3) Now you can draw something Full credit example : Show the effect in the market for ice cream cones of an increase in the price of electricity. Because price shifts the supply curve, and there is an increase in the price of electricity, the seller cannot make as many ice cream cones and therefore, the supply curve shifts left. 1/23/08 Supply and Demand together continued Full credit example: Show the effect in the market for chocolate chip cookies, of a decrease in the price of milk. Because milk is a complement we know that the demand curve is shifting. We also know it is shifting right because it is a complement. * When both curves are shifted, the combined effect on one variable must be unknown....
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This note was uploaded on 04/18/2008 for the course ECO 2023 taught by Professor O'gorman during the Spring '08 term at South Florida Community College.

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eco4 - Three steps to getting through Economics 1) Decide...

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