Econ 2 - 1 Demand and Supply Curves 1 14.01 Principles of...

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1 1 Demand and Supply Curves 14.01 Principles of Microeconomics, Fall 2007 Chia-Hui Chen September 7, 2007 Lecture 2 The Basics of Supply and Demand BUYERS = DEMAND MARKET EQUILIBRIUM SELLERS = SUPPLY Outline 1. Chap 2: Demand and Supply Curves 2. Chap 2: Equilibrium in the Market 3. Chap 2: Government Interventions 1 Demand and Supply Curves Quantity Demanded and Quantity Supplied Q D (Quantity demanded). Depends on price. Q D = D ( P ) . (1.1) Q S (Quantity supplied). Depends on price. Q S = D ( P ) . (1.2) Notes: 1. Market demand/supply is the sum of individual demands/supplies. 2. Assume individuals are price takers who cannot affect price. Demand and Supply Curves From Equations (1.1) and (1.2), draw demand curves and supply curves as follows: Cite as: Chia-Hui Chen, course materials for 14.01 Principles of Microeconomics, Fall 2007. MIT OpenCourseWare (http://ocw.mit.edu), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].
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2 Figure 1: Supply curve. Price higher, Figure 2: Demand curve. Price quantity supplied more. higher, quantity demanded less. Figure 3: Shift in supply curve. Figure 4: Shift in demand curve. Cite as: Chia-Hui Chen, course materials for 14.01 Principles of Microeconomics, Fall 2007. MIT OpenCourseWare (http://ocw.mit.edu), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY].
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2 Equilibrium
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Econ 2 - 1 Demand and Supply Curves 1 14.01 Principles of...

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