Lecture5--SUPPLYANDDEMANDANALYSIS

Lecture5--SUPPLYANDDEMANDANALYSIS - Supply and Demand...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
Supply and Demand Analysis How free and competitive markets work to establish equilibrium prices and quantities sold
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Market Equilibrium A market is in equilibrium when price adjusts so that quantity demanded equals quantity supplied Quantity Supply Price $3.00 400 Equilibrium point Demand
Background image of page 2
Market Equilibrium A market is in equilibrium when price adjusts so that quantity demanded equals quantity supplied If price is greater than equilibrium level there will be a surplus which forces price down Quantity Supply Price $3.00 400 $4.50 Demand
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Market Equilibrium A market is in equilibrium when price adjusts so that quantity demanded equals quantity supplied If price is less than equilibrium level there will be a shortage which forces price up Quantity Supply Price $3.00 400 $1.50 Demand
Background image of page 4
Grandma’s Car
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
An Increase in Demand Initial Demand Supply Price Quantity 0 E1 P1 Q1
Background image of page 6
An Increase in Demand Initial Demand Supply New Demand Price Quantity 0 E1 E2 Q1 Q2 Q’ P1 P2
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
An Increase in Demand Initial Demand Supply New Demand Price Quantity 0 E1 E2 Q1 Q2 Q’ Increase in Demand P1 P2
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 21

Lecture5--SUPPLYANDDEMANDANALYSIS - Supply and Demand...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online