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Chapter4Summary

Chapter4Summary - 1 Chapter 4 Summary Tucker Macroeconomics...

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Chapter 4 Summary Tucker , Macroeconomics for Today , 5th Edition 1. Equilibrium prices and equilibrium market quantities change as demand schedules, or supply schedules, or both, shift to the right or to the left. You should know the non-price determinants of demand, and the non-price determinants of supply, and know how changes in any of them will cause either the demand or the supply schedules to shift. You also should be prepared to analyze the implications of such shifts for changes in equilibrium prices or quantities. I suggest that you begin by assuming a fixed supply schedule, and then analyze the impact of changes in each of the non-price determinants of demand and the implications of such changes for equilibrium prices and market quantities. I would then repeat the exercise by fixing the market demand schedule, and changing each of the non-price determinants of supply. In each case be sure to trace out the implications for equilibrium market price and quantities. 2. I would then begin to consider pairs of changes of the non-price determinants of demand and supply. For example, analyze what will happen to equilibrium price and market quantity if consumers' incomes rise (X being a normal good) and the prices of the resources used to produce X decline. This will produce both an increase in demand (a rightward shift of the demand schedule) and an increase in supply (a rightward shift in the supply schedule). As you graph this
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