Econ 101 Winter 2010 Lecture 5

Econ 101 Winter 2010 Lecture 5 - Economics 101...

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Click to edit Master subtitle style Lecture 1 Economics 101 Microeconomics University of Michigan Winter 2010 Lecture 5
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Lecture 1 22 Announcements n Today’s reading n Chapter 3, p 74 – 78, Chapter 4, p 101-102 (Supply Decisions) n Chapter 3, p 66 – 74, Chapter 4, p 98 – 101 (Demand Decisions) n Office Hours: n Monday: 12 – 2 n Tuesday: 10 – 1 n Wednesday: 12 – 2 n Thursday: 11 – 2 n Or call (734) 358 1590 for an appointment n No quiz in discussion section this week
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Lecture 1 33 The Supply Curve Identifies quantity of a good supplied to the market as a function of the price of that good Considers impact of price changes on the quantity of the good supplied, ceteris paribus n i.e. the following things are assumed unchanged: n Prices of other goods n Technology n Costs of inputs Derived from the optimizing behavior of suppliers n Suppliers direct resources to their highest valued use n Compare value of resources in various uses n Implies supply curve is the inverse of the marginal opportunity cost curve n Supply curve is positively sloped n “Law of Supply”
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Lecture 1 MOC1 Good 1 Good 2 Good 1 MOC (units of good 2 ) PPF Positively sloped – reflecting that MOC increases with output Supply curve is the dollar value of this marginal opportunity cost curve Slope = -MOC1 Slope = -MOC2 MOC2 Slope = -MOC3 MOC3 Slope = -MOC4 MOC4 Assume PPF is bowed out Marginal opportunity cost (MOC) curve
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Lecture 1 55 What Determines the Shape of the Shape of the PPF n This dictates the shape of the MOC curve n Depends upon n Technology n Cost of and availability of factors of production n Note: If the production possibility set is bowed outwards, the supply curve must be upward sloping Price of alternative products n Enables us to generate a dollar value of
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This note was uploaded on 04/20/2010 for the course ECON 101 taught by Professor Gerson during the Winter '08 term at University of Michigan.

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Econ 101 Winter 2010 Lecture 5 - Economics 101...

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