EC101sOutlines06Supply&DemandShifts

- EC101 BB EE Manove Lecture 6 Market Equilibrium and Shifts in Supply and Demand Shifts in Supply and Demand Supply Demand p1 Example The Market

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EC101 BB & EE / Manove Lecture 6: Market Equilibrium and Shifts in Supply and Demand Supply & Demand p 1 EC101 BB & EE / Manove Example: The Market for Milk In the market for milk described previously, market supply and demand are as follows. Price ($) Market Supply (Qts/day) Demand (Qts/day) 0.20 300 3200 0.40 600 2000 0.60 1200 0.80 1800 1.00 2400 200 1.20 3600 100 Supply & Demand>Market for Milk p 2
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EC101 BB & EE / Manove Movement towards Market Equilibrium If the price is above the equilibrium price , there will be excess supply , sellers cannot sell as much as they want, so they will tend to offer buyers a lower price. Therefore, the price will tend to move downwards towards the equilibrium price Supply & Demand>Excess Supply p 3 downwards towards the equilibrium price. EC101 BB & EE / Manove Movement towards Market Equilibrium If the price is below the equilibrium price , there will be excess demand , buyers will not be able to buy all they want to buyers will not be able to buy all they want to buy, so they will tend to offer sellers a higher price so they will tend to offer sellers a higher price. Therefore, the price will tend to move upwards towards the equilibrium price. Supply & Demand>Excess Demand p 4
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EC101 BB & EE / Manove Movement Towards Equilibrium in the Market for Milk P Q S Q D 0.20 300 3200 0.40 600 2000 0.60 1200 1200 0.80 1800 600 1.00 2400 200 1.20 3600 100 Supply & Demand>Movement Towards Equilibrium p 5 0 1000 2000 3000 4000 Quantity EC101 BB & EE / Manove Government Intervention into Markets Frequently, large groups of people are unhappy with the market-equilibrium price.
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This note was uploaded on 12/11/2010 for the course ECON 101 taught by Professor Idson during the Fall '08 term at BU.

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- EC101 BB EE Manove Lecture 6 Market Equilibrium and Shifts in Supply and Demand Shifts in Supply and Demand Supply Demand p1 Example The Market

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