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ECN211 L6 Supply (continued)_BB

# ECN211 L6 Supply (continued)_BB - ECN 211 Macroeconomic...

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1 ECN 211 Macroeconomic Principles L6: Supply and Equilibrium

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Algebra- Supply Curve Simple:  Qs = Ex: If price is \$150 then quantity supplied is? A) Qs = Note: as P is on the vertical axis we usually look at  (inverse) supply curves: P = 2
Translating into table form 3 Price Quantity Supplied \$350 600 \$300 \$250 400 \$200 \$150 200 \$100 \$50 0 Remember: P =

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Translating into a  Diagram 4 Price Quantity Supplied Supply \$300 \$50 500 600 Remember: P = \$350
Complicated: Supply for good X: Qs x  = 0.5P  - 0.25Wage  + 0.6Prod - 100 If the price of good X is \$400, wages are \$100 and  prductivity is 40 what is the quantity supplied of good X? Qs x  = 5

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6 Equilibrium In equilibrium, ____________ equals _____________________ \$5 20 Price Quantity \$10 10 S D 15 \$7.50 Equilibrium
7 Reaching Equilibrium Price is the mechanism by which supply and demand equilibrate \$5 20 Price Quantity \$10 10 S D 15 \$7.50 Excess Supply Excess Demand

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Price Per DVD Quantity  supplied Quantity  demanded \$5 75 15 \$4 60 30 \$3 45 45 \$2 30 60 \$1 15 75 Equilibrium Amount Sold
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ECN211 L6 Supply (continued)_BB - ECN 211 Macroeconomic...

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