The Basics of Supply and Demand•Understanding and predicting how changing world economic conditions affect market price and production•Evaluating the impact of government price controls, minimum wages, price supports, and production incentives•Determining how taxes, subsidies, tariffs, and import quotas affect consumers and producersSupply-demand analysis can be applied to a wide variety of interesting and important problems. To name a few:Econ 100A Mortimer
SUPPLY AND DEMANDThe Supply CurveRelationship between the quantityof a good that producers are willing to sell and the priceof the good. We can write this relationship as an equation: QS= QS(P)Shifting the Supply CurveWhen production costs (e.g., wages, interest charges, and the costs of raw materials) decrease,output increases no matter what the market price happens to be. The entire supply curve thus shifts to the right.Economists often use the phrase change in supplyto refer to shifts in the supply curve, while reserving the phrase change in the quantity supplied to apply to movements along the supply curve.Econ 100A Mortimer
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