EC 201 9-12-08 - Coffee & pop Different brands...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
EC 201 9-12-08 P oil → S gasoline left (S↓) P oil ↑ → P gasoline ↑ (all else equal) Ike missed most of the Gulf of Mexico oil rigs o not going to miss refineries – ¼ gasoline used in US processed in these o P oil ~ unchanged o P gasoline ↑ 30 % Avian flu: slaughter of chickens o → deterioration of technology for eggs o → S eggs left ( S↓) o →P↑Q↓ More fun demand shifter vocabulary o Income normal good Income ↑ → D↑ (right) Income ↓ → D↓ (left) Inferior good Income ↑ → D ↓ (left) Income ↑ → D ↑ (right) Thrift- store clothes Spam o Price of other goods o o P buns ↑ → P “dog/bun composite” ↑ o P wheat ↑ wheat input buns
Background image of page 1

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

View Full DocumentRight Arrow Icon
o D hot dogs ↓ (left) o “complements” (tend to be used together) o Complements: P A ↑ → D B ↓ (left) P A ↓→ D B ↑ (right) o P Eur. Vacation ↑ → D USA vacation ↑ (right) o “substitutes” P A ↑, substitutes away from A towards B
Background image of page 2
Background image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Coffee & pop Different brands of same good P x D y (right) P x D y (left) Mobil Hagadorn & Haslett Marathon Hagadorn & Grand River o Fairly close substitutes o Prices of close substitutes must be close o Demand right P D More popular Incomes (normal) Income (inferior) Price of complement Price of substitute o Demand left P Q Less popular o S right P Q Price of input Tech. improvement o S left P Q Deterioration of tech. o Market forces push strongly toward equilibrium price Unless equilibrium price is outlawed Price controls A. price ceiling Maximum legal price o Ex. : rent controls Some communities Gasoline price controls until 1980s B. price floor Minimum legal price o Ex: agriculture price supports o Minimum wage...
View Full Document

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.

Page1 / 3

EC 201 9-12-08 - Coffee & pop Different brands...

This preview shows document pages 1 - 3. Sign up to view the full document.

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