Demand and Supply part 2

Demand and Supply part 2 - SUPPLY & DEMAND ANALYSIS...

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Unformatted text preview: SUPPLY & DEMAND ANALYSIS OUTLINE: SHIFTING THE DEMAND CURVE; SUPPLY FIXED SHIFTING THE SUPPLY CURVE; DEMAND FIXED SHIFTING BOTH DEMAND & SUPPLY MOVING FROM MICRO- TO MACRO- ECONOMICS Econ 1021 Fall 2009 Part 2 of 2 Reading: pp. 81-83, 85-88 from Macroeconomics in Context Price of Fish Qty Demanded New Qty Demanded ( $ / lb ) (millions lbs. / month) (millions lbs. / month) $ 2.40 6 12 9 2.20 8 11 11 2.00 10 10 13 1.80 12 9 15 1.60 14 8 17 Shifts in Demand: Income Suppose that Incomes Rise… Q S Shifts in Demand: Income 1.60 1.80 2.00 2.20 2.40 2 4 6 8 10 11 12 14 Quantity millions lbs/month Price $/lb ● ● ● ● ● Supply ● ● ● ● old equilib. shortage Demand New Demand New equilib. Shifts in Demand Any factor that causes the demand curve to shift to the right, and does not affect the supply curve, will raise the equilibrium price and increase the equilibrium quantity. Any factor that causes the demand curve to shift to the left, and does not affect the supply curve, will lower the equilibrium price and lower the equilibrium quantity. Everything works in reverse when income falls. What causes demand curve to... Shift right? Shift left? increase # buyers increase income (“normal” good; opposite for “inferior”) like product more expectations decrease price of complement good increase price of...
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This note was uploaded on 12/03/2010 for the course ECON 1021 taught by Professor Lang during the Spring '10 term at UChicago.

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Demand and Supply part 2 - SUPPLY & DEMAND ANALYSIS...

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