10Spring.Lecture Notes.Supply_Equilibrium_Statics

# 10Spring.Lecture Notes.Supply_Equilibrium_Statics - • Q...

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Managerial Economics Managerial Economics (ECON 5203) Dr. David L. May Oklahoma City University

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Supply Supply Law of Supply Positive relationship between the Quantity sellers are willing to supply and the prices they’ll accept for those quantities, ceteris paribus Changes in Quantity Supplied Movement along the Supply Curve Changes in Supply Shift of the Supply Curve Q X = f (P X , Cost-related stuff) Cost = input prices, taxes Higher costs shift supply inward (holding P X constant) 10/22/10 2 Managerial Economics
Supply (cont) Supply Algebra Q X = 500 + 2P X = Positive relationship between Q and Price 10/22/10 3 Managerial Economics

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Supply and Demand - Equilibrium

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Unformatted text preview: • Q Supplied = Q Demanded – Algebra – Q X = 500 + 2P X (Supply Function) = Q X = 900- 2P X (Demand Function) 500 + 2P = 900 - 2P 10/22/10 4 Managerial Economics Equilibrium - Distortions • Price Ceilings – Price may not legally rise above this level • Price Floors – Prices may not legally fall below this level • Taxes (who bears the burden?) – Ad Valorem (by value) – Excise (per unit) 10/22/10 5 Managerial Economics Comparative Static Analysis • Changes (Shifts) in Supply • Changes (Shifts) in Demand • Changes in Both – Which direction do Q and P change? 10/22/10 6 Managerial Economics...
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## This note was uploaded on 10/21/2010 for the course ACCT 12345 taught by Professor Beth during the Spring '10 term at Oklahoma City Community College.

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10Spring.Lecture Notes.Supply_Equilibrium_Statics - • Q...

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