This preview shows page 1. Sign up to view the full content.
Unformatted text preview: in the future, then ............. Expectations of Future Prices (2) Supply decreases now , because sellers wait to sell at higher prices. Demand increases now , because buyers stock up before prices rise. => The price rises now. In this way: Current prices move to reflect expected future prices. Long Run Effects LR curves are usually more elastic than SR curves. All SR and LR curves intersect initially. SR equilibrium occurs where (SR) D and S intersect. LR equilibrium occurs where LRD and LRS intersect. Rules for analyzing problems in which Demand or Supply is different in the LR:...
View Full Document
This note was uploaded on 04/02/2008 for the course ECON 200 taught by Professor Cramer during the Spring '07 term at University of Arizona- Tucson.
- Spring '07
- Supply And Demand