Lecture Slides 10 - Overview Lecture 10 Last class...

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Overview ( Lecture # 10) Last class: Equilibrium Today: Equilibrium cont… Introduction to Elasticity 11/30/16 1 Econ 130_ Fall 2016 _ C Dhakal
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11/30/16 Econ 130_ Fall 2016 _ C Dhakal 2
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11/30/16 Econ 130_ Fall 2016 _ C Dhakal 3 Price (per Pound) Quantity Demanded ( billions of pounds) Quantity Supplied ( billions of pounds) Shortage ( billions of pounds) Surplus ( billions of pounds) 3.5 0.5 3.5 _ 3 3 1 3 _ 2 2.5 1.5 2.5 _ 1 2 2 2 _ _ 1.5 2.5 1.5 1 _ 1 3 1 2 _ 0.05 3.5 0.5 3 _ Direction of pressure on Price Downward Downward Downward Equilibrium Upward Upward Upward
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What happens when the demand curve change Suppose there is a news report that an outbreak of food poisoning has been linked to eating chicken. As a result demand for chicken decreases. Draw the new demand curve?? Demand curve will shift to left What happens to the equilibrium price and quantity demanded?? Both price and quantity decrease.. Summary: A decrease in demand leads to a fall in both the equilibrium price and the equilibrium quantity. An increase in demand leads to a rise in both equilibrium price and equilibrium quantity.
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