Fitch%20-%20Class2%20F10%20-%20%20Supply%20and%20Demand

Fitch%20-%20Class2%20F10%20-%20%20Supply%20and%20Demand -...

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Unformatted text preview: Fall 2010 UGBA101A-03 Microeconomic Analysis for Slide 1 Business Decisions Class 2 Prof. Todd Fitch Chapter 2: Demand and Supply Agenda u What is behind the supply and demand curves? u We will leave the details for future classes and focus on some intuitions Chapter 2 Supply and Demand Slide 2 u How prices change in a market and why? u Movements along the curve and movements (shifts) of the curve u Try to apply the new tools to learn something about how fear after 9/11 impacted economic variables. The Basics of Supply and Demand • Understanding and predicting how changing world economic conditions affect market price and production • Evaluating the impact of government price controls, minimum wages, price supports, and production incentives Supply-demand analysis is a fundamental and powerful tool that can be applied to a wide variety of interesting and important problems. To name a few: Chapter 2 Supply and Demand Slide 3 • Determining how taxes, subsidies, tariffs, and import quotas affect consumers and producers Let’s think about the market for office space in New York before 9/11 SUPPLY AND DEMAND 2.1 The Supply Curve ● supply curve Relationship between the quantity of a good that producers are willing to sell and the price of the good. The supply curve shows how the quantity of a good offered for sale changes as the price of the good changes. The supply curve Chapter 2 Supply and Demand Slide 4 is upward sloping: The higher the price, the more firms are able and willing to produce and sell. SUPPLY AND DEMAND 2.1 The Supply Curve The supply curve is thus a relationship between the quantity supplied and the price. We can write this relationship as an equation: Q S = Q S ( P ) Other Variables That Affect Supply roduction osts, including wages, interest charges, and the costs of raw materials Chapter 2 Supply and Demand Slide 5 Production costs, including wages, interest charges, and the costs of raw materials....
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This note was uploaded on 11/23/2010 for the course UGBA 101A taught by Professor Mccullough during the Fall '08 term at Berkeley.

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Fitch%20-%20Class2%20F10%20-%20%20Supply%20and%20Demand -...

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