Econ1-Fall2010-03b-DemSupply-handout

Econ1-Fall2010-03b-DemSupply-handout - Readings Economics1...

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Economics 1 rinciples of Microeconomics Principles of Microeconomics 3. Demand & Supply (B) Fall 2010 Herb Newhouse 1 eadings Readings h 3: Supply and Demand (p 68 7) Ch 3: Supply and Demand (p 68 87) Market Equilibrium redicting and Explaining Changes in Prices and Predicting and Explaining Changes in Prices and Quantities ficiency and Equilibrium Efficiency and Equilibrium 2 utline Outline arket Equilibrium Market Equilibrium. Price Ceilings and Price Floors. Shifts in the Equilibrium Price and Quantity. Efficiency and Equilibrium. Algebraic Example. 3 arket Not in Equilibrium Market Not in Equilibrium P S P H D Q At P H , Q D < Q S . There is a surplus of the good. P . 4
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arket Not in Equilibrium Market Not in Equilibrium P S P L D Q At P L , Q D > Q S . There is a shortage of the good. P . 5 arket Equilibrium Market Equilibrium P S P * D Q Q * P *, Q D = Q S = Q *. The market is in equilibrium. 6 rice Ceilings and Rent Controls Price Ceilings and Rent Controls Price ceiling :a maximum allowable price specified by law. Rent controls are a type of price ceiling. bove m rice elow qm rice P S P S Above Eqm Price Below Eqm Price $1000 $1000 D D Q Q Q * Q * 7 egative Implications of Rent Controls Negative Implications of Rent Controls Long waiting lists for apartments and increased search activity.
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This note was uploaded on 06/12/2011 for the course CS 1 taught by Professor Staff during the Fall '08 term at Cornell.

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Econ1-Fall2010-03b-DemSupply-handout - Readings Economics1...

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