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University of California, Davis
Department of Agricultural Economics
ARE 100A
Richard Howitt
Handout # 1
Winter 2010
Shifts in Supply Functions
Demand
Supply
()
D
QD
P
=
(, )
S
QS
P
f
=
Equate supply and demand quantities to solve for the equilibrium price
DP
SP f
=
Since the price in the real estate market is a function of foreclosures we define
Pp
f
=
the equilibrium is now
(()
)
, )
Dpf
S
f f
ρ
=
Applying the chain rule for derivation to both sides—note the partial derivatives
)
dD p f
dP
S p f
f dP
S p f
f
dP
df
P
df
f
∂∂
=+
Simplifying the notation inside the parentheses to
•
, we can rewrite:
dD
dP
S
dP
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This note was uploaded on 03/18/2010 for the course ARE 100A taught by Professor Constantine during the Winter '08 term at UC Davis.
 Winter '08
 CONSTANTINE

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