Econ 101 Winter 2010 Lecture 12

Econ 101 Winter 2010 Lecture 12 - Click to edit Master...

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Click to edit Master subtitle style Lecture 1 Economics 101 Microeconomics University of Michigan Winter 2010 Lecture 12 Lecture 1 22 Lecture 1 Announcements n Todays reading: n Reading on CTools: Supply and Demand Functions n Chapter 6 n Problem set 7 available on CTools Lecture 1 33 Lecture 1 Supply Functions We will work primarily with linear supply functions in this course Simple case: price is the only explanatory variable QS = a + b P n b : inverse of the supply curve slope n Always positive Lecture 1 44 Lecture 1 Qs = 10 + 5 P Q P 10 40 6 Slope = 1/5 Lecture 1 55 Lecture 1 Qs = -10 + 5 P Q P-10 20 6 Slope = 1/5 Lecture 1 66 Lecture 1 Infinitely elastic supply Q P P0 Slope = 0 Q1 Q2 Supply function is undefined Lecture 1 77 Lecture 1 Relatively elastic supply Q P Slope = P/Q = 1/ belastic > 0 Q1 Q2 Qs = a + belastic P P1 P2 P Q Lecture 1 88 Lecture 1 Relatively inelastic supply Q P Slope = P/Q = 1/ binelastic > 1/ belastic Q1 Q2 Qs = a + binelastic P P1 P2 P Q Observe: 0 < binelastic < belastic Lecture 1 99 Lecture 1 Perfectly inelastic supply Q P Slope is not defined a Q2 Qs = a P1 P2 Lecture 1 10 10 Lecture 1 Supply as a function of many Example: Qs = -100 + 2 P + 10 x 12 y n + 2P : quantity supplied increases as P increases n i.e. supply curve is upward sloping n Every $1 increase in price -> 2 unit increase in quantity supplied n Coefficient is a measure of sensitivity of quantity supplied to Lecture 1 11 11 Lecture 1 Supply as a function of many Example: Qs = -100 + 2 P + 10 x 12 y n + 10 x : quantity supplied increases as x increases n Increasing x will shift the supply curve to the right n Coefficient is a measure of sensitivity: a large coefficient -> large shift in the supply curve n What might x be? n Productivity index n Measure of technology n Index of some favorable environmental factor n Level of training for workforce etc. Lecture 1 12 12 Lecture 1 Supply as a function of many Example: Qs = -100 + 2 P + 10 x 12 y n-12 y : quantity supplied decreases y increases n i.e. supply curve shifts leftward as y increases n Coefficient is a measure of sensitivity: a large coefficient (in magnitude) -> large shift in the supply curve n What might y be?...
View Full Document

Page1 / 43

Econ 101 Winter 2010 Lecture 12 - Click to edit Master...

This preview shows document pages 1 - 13. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online