EC 201 9-10-08 - EC 201 Demand curve o o Allow price to...

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EC 201 9-10-08 Demand curve o Allow price to vary o All other influences on buyers held constant Supply curve o Allow price to vary o All other influences on sellers held constant S P($/Q) Q Equilibrium (good characteristics) o Qd = Qs o No shortage, surplus If shortage, long lines o If shortage → P↑ o If surplus→ P↓ If equilibrium, no pressure for price to change We’re always tending toward equilibrium Market forces push us o Intersection of Supply and demand curve o “scissors” metaphor Need both supply and demand to get an equilibrium
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If you only have one blade on scissors it would not cut, need both Type of change Representation ∆P movement along existing D “change in Qd or change in Qs” ∆anything else shift to new S or D “change in D or change in S” D shifters o Tastes/ preferences o Incomes o Other prices o Expectations AIDS → change in tastes for latex gloves
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This note was uploaded on 04/19/2011 for the course EC 201 taught by Professor Ballard during the Fall '08 term at University of Michigan.

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EC 201 9-10-08 - EC 201 Demand curve o o Allow price to...

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