Lecture7 - Announcements HW3 is up on MyEconLab HW3 is up...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
nnouncements Announcements W3 is up on yEconLab HW3 is up on MyEconLab. We will start Chapter 4 on Friday–we will not ver the stuff at the end (consumer surplus cover the stuff at the end (consumer surplus and international trade) at this point. 1of 46
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
MARKET EQUILIBRIUM ilib i diti th t it h equilibrium The condition that exists when quantity supplied and quantity demanded are l At ilib i th i td f equal. At equilibrium, there is no tendency for price to change. 2of 46
Background image of page 2
uilibrium Equilibrium ote: Equilibrium is not just where the Note: Equilibrium is not just where the quantity bought is equal to the quantity sold. This is always true. In order for something to have been bought it must be sold and vice versa. Therefore this is not a correct definition. Need curves to be intersecting—at that point, quantity supplied is equal to quantity demanded . 3of 46
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
MARKET EQUILIBRIUM EXCESS DEMAND cess demand or shortage e condition that excess demand or shortage The condition that exists when quantity demanded exceeds quantity supplied at the current price. 4of 46
Background image of page 4
MARKET EQUILIBRIUM Excess Demand, or Shortage 5of 46 When quantity demanded exceeds quantity supplied, price tends to rise. When the price in a market rises, quantity demanded falls and quantity supplied rises until an equilibrium is reached at which quantity demanded and quantity supplied are equal.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
MARKET EQUILIBRIUM EXCESS SUPPLY excess supply or surplus The condition that exists when quantity supplied exceeds quantity demanded at the current price. 6of 46
Background image of page 6
MARKET EQUILIBRIUM Excess Supply, or Surplus hen quantity supplied exceeds quantity demanded at the current price the price tends to 7of 46 When quantity supplied exceeds quantity demanded at the current price, the price tends to fall. When price falls, quantity supplied is likely to decrease and quantity demanded is likely to increase until an equilibrium price is reached where quantity supplied and quantity demanded are equal.
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
pply and Demand Supply and Demand Using this supply and demand model, we can predict that: 1.Excess supply (relative to demand) leads to a decrease in Price 2.Excess demand (relative to supply) leads to an increase in Price.
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/18/2008 for the course ECON 2005 taught by Professor Zirkle during the Spring '07 term at Virginia Tech.

Page1 / 30

Lecture7 - Announcements HW3 is up on MyEconLab HW3 is up...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online