L6R D-S-eq - Market Equilibrium Lecture 6 Jennifer P...

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macroS09 LEC6-1 Market Equilibrium Lecture 6 Jennifer P. Wissink ©2009 John M. Abowd and Jennifer P. Wissink, all rights reserved. February 4, 2009
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macroS09 LEC6-2 Announcements Due to another meeting…. Office hours this week Wednesday will be from 11:10am-12:30pm. This WEEK: Chapters 3&4, and maybe even some of 5. Next week: Chapters 5&6. QUIZ #2-econ1120-S09 was posted on SUNDAY. It’s due this coming Friday. Don’t forget to use: The ETC (go to office 477 in Uris Hall to see hours) Albert Alexander and the Learning Strategies Center (see web for info) All the TAs and me for office hours TakeNotes (if you want to buy them) MyEconLab WISSINK OLD TRADITIONAL PROBLEM SETS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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macroS09 LEC6-3 The Supply Function The supply function for X: Q X S = g(P X , P fop , P oc , S&T, N) Where: Q X S = maximum quantity that sellers are willing and able to sell P X = X’s price P fop = the price of factors of production P oc = the opportunity costs S&T = science and technology N = number of firms in the market
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macroS09 LEC6-4 The Supply Curve The supply curve, a.k.a. supply, describes the relation between a good’s price and the maximum quantity that sellers are willing and able to put on the market for sale at that price, ceteris paribus. Ceteris paribus means holding all the other supply function variables constant at some given level. – Q X S = g(P X ) given P fop , P oc , S&T, N
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macroS09 LEC6-5 The Supply Curve Governed by “ The Law of Supply” the relationship between a good’s price and the quantity supplied of the good is positive. » higher prices generate higher quantities supplied » lower price generate lower quantities supplied Example: Suppose P X falls from $25 to $10, then the quantity supplied might fall from, say, Q X =31 to Q X =16.
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