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Lecture 5

# Lecture 5 - ΔQ =-2ΔP.01ΔM 5ΔP o ΔQ/ΔP =-2 ΔQ/ΔM...

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A-Les Rolfe 1200, Les-Z Bunche 1209B 1. Market & Equil 2. Shocks/Adj. 3. Welfare Measures 4. Examples ΔQ = Δ(100-2P), 100 is a constant ΔQ = -2ΔP, ΔQ/ΔP = -2 Everything on the right side of semi colon are held constant and they cause shifts on the whole demand curve Q = F(P;preference, M, P O )= F(P;preference, income, price of other goods,…) Normal good – if people’s income goes up demand goes up Inferior goods – if people’s income goes up they actually buy less Hamburger, t-bone example: normal good – t-bone, inferior good – hamburger Price of other goods - Goods that go hand-in-hand

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Unformatted text preview: ΔQ = -2ΔP-.01ΔM+5ΔP o , ΔQ/ΔP = -2, ΔQ/ΔM = -0.1 (therefore an inferior good), ΔP/ΔP o = +5>0 this is a complement/substitute?*** Equilibrium – people are content, the result will stay, where neither side is willing to change Competitive equilibrium (the intersection between supply and demand curves) Excess supply causes surplus causes competition among producers causes lower prices Excess demand causes competition among the buyers that causes prices to go up demand goes up (apple example)...
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