Micro Notes Week 3 - MicroEconomics Lawrence Lafauci Week...

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MicroEconomics Lawrence Lafauci Week Three & Four Monday, March 20, 2017 In technology > increase in efficiency > decrease in cost per unit > increases profit margin > increases supply a. Taxes (government taking money) > increase in cost per unit > decrease in profit margin > decrease in supply b. Subsidies (government providing money) > decrease in cost per unit > increase in profit margin > increase in supply *lowering taxes would also follow this path* Produce expectations: a. Price expectations: increase in price in near future > decrease in supply for the present c. Decrease in price in near future > increase in supply for the present in the # of firms (Sellers) 1. Increase in # of sellers > increase in supply 2. Decrease in # of sellers > decrease in supply Market Equilibrium – a specific price where Q d = Q s or where the market is cleared (no surplus or shortage) Increase in demand > supply constant > Equilibrium Price ( P e) increase > Equilibrium Quantity ( Q e) increases Decrease in supply > demand constant > P e increases > Q e decreases Price Ceiling – the government establishes a maximum price for a product which is below the equilibrium or market price
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1. Rental Housing Units (Rent Controls) 2. Gasoline 3. Doctor Fees > Medicare & Medicaid patients
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