Econ Lecture 7 9

Econ Lecture 7 9 - Non market allocation Not let market go...

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Econ Lecture 7 9.14 15:00 Non Market Allocation – public options if you don’t like the equilibrium price Demand of CD  if – 1 you by and mp3 player, the price of cd falls if you win lottery Demand decreases, demand is unchanged, demand increases Assuming conventional demand and supply curves – successful boycott of sea  bass as a secondary effect will……. Cause a – increase in price and output of sea bass of subsitutes Increase in demand of subisitutues – kick up the price of sea bas and subs A market is in equilibrium Then, demand increases and supply decreases  according to our model…. . Price goes up and the effect the quantity is unclear  o Need more information about how far the shifts were.  But you know for  sure that the prices will go up
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Unformatted text preview: Non market allocation Not let market go to equilibrium Celing price – people want Q2 but sellers want to sell Q1 amount so there is a shortange and there will be a pressure to put it up More demand then supply - lottery method Allocation by sellers preferences – another method Government price controls Price floor – minimum price – every time govt sets a price above equilibrium, there will be a surplus Dealing with a surplus that cannot be stored. If there is a surplus there is probably going to be a floor. Student comes down the isle on the bus – she trips over his foot – falls coffee spills Change scenario – intentionally trips - but she doesn’t spill her coffee • Look at consequences 15:00 15:00...
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This note was uploaded on 01/19/2011 for the course ECON 2005 taught by Professor Zirkle during the Fall '07 term at Virginia Tech.

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Econ Lecture 7 9 - Non market allocation Not let market go...

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