Chapter 10 Outline [Short Review]

Chapter 10 Outline [Short Review] - Chapter 10 The Partial...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 10: The Partial Equilibrium Competitive Model Supply & Demand Review; Pg. 289 – 294 Market Reaction to a Shift in Demand 2 impt facts re: short-run market equilb : 1) Indv’s impotence in market -b/c competitive model assumes there’s mny demanders, the shift of a single indv’s demand curve eg. outward=>~no effect on market demand curve, thus price will remain unchanged; vs. If many indvs experience shifts outward: In thr D curves, entire market D curve may shift=>S-D balance re-est’d=>P↑=>Q↑; thus here P has acted to ration demand, as well as show 2) Short-run supply response - an ↑ in market P acts as an inducement to incr production; as this happens thus typical firm also incr’s its profits Shifts in Supply and Demand Curves: A Graphical Analysis Change in # of firms shifts short-run (S-R) S curve; whn S/D curve shifts=>equilb P, Q changes Demand Curves Shift b/c: Incomes change P of substitutes/complements change Preferences change
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/24/2008 for the course ECON 11 taught by Professor Cunningham during the Fall '08 term at UCLA.

Ask a homework question - tutors are online