Lecture 6

Lecture 6 - EC 1 UCLA Dr. Bresnock Lecture 4 Market...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
EC 1 UCLA Dr. Bresnock Lecture 4 Market Analysis Continued In the table below, several points will be made to review the material that was covered in the last lecture. Then we will proceed to tabulate new information pertaining to our market analysis. Table 1 Market Analysis (1) (2) (3) (4) (5) (6) (7) EP using (3,4) TR QS P QD TR EP use (4,5) Elasticity 100 11 40 1.11 900 90 10 50 500 -2.33 E 1.12 720 80 9 60 540 -1.73 E 1.13 560 70 8 70 560 -1.31 E 1.15 420 60 7 80 560 -1. Unit Elastic 1.18 300 50 6 90 540 -.76 I 1.22 200 40 5 100 500 -.58 I 1.29 100 30 4 110 440 -.43
Background image of page 1

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

View Full DocumentRight Arrow Icon
EC 1 Lecture 4 A. Bresnock Graph 1 Market Equilibrium and Adjustment to a Surplus Graph 2 Market Equilibrium and Adjustment to a Shortage 2
Background image of page 2
EC 1 Lecture 4 A. Bresnock Price Controls -- one form of government intervention in markets. There are two types of price controls, P C . 1) Price Ceilings -- For an effective price ceiling to work, it is set so that the market price will not rise above P C . Results: Misallocation of resources = too little is produced. Graph 3 Price Ceiling vs Market Equilibrium (Ex. Rent control) 2) Price Floor -- For an effective price floor to work, it is set so that the market price will not fall below P C . Results: Misallocation of resources = too much is produced. Graph 4 Price Floor vs Market Equilibrium (Ex. Agricultural price supports) A B Price Floor P C Q D Q E Q S Q s – Q E = misallocation of resources TR @ Eq = P E * Q E TR @ P C = P C * Q S TR increases, assuming there is a buy up to surplus 3
Background image of page 3

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

View Full DocumentRight Arrow Icon
EC 1 Lecture 4
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 8

Lecture 6 - EC 1 UCLA Dr. Bresnock Lecture 4 Market...

This preview shows document pages 1 - 5. Sign up to view the full document.

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