Lecture Notes 2

Lecture Notes 2 - 26/01/11 Comparative Statics: Start at...

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26/01/11 Comparative Statics: Start at equilibrium, stationary situation, change a factor and compare a situation If tastes and preferences change, demand curve will shift If demand increases, there is increase in the price and an increase in the equilibrium quantity Fall in demand, will lead to decrease in the price of a good and a decrease in the equilibrium quantity of demand In situations where the equilibrium quantity is zero, a change in one of the controlled factors, such as income or technology, could mean that at some point in the future the demand/supply curve could shift so that there is a point of intersection. When this happens, a good would be produced. Intersection along the axis – corner solution Positive quantity and price, intersection in the positive xy plane is an interior solution Shares of Stocks: Stock: piece of ownership (public corporation) Dividends: profits made by shareholders What determines stock price? Expectations of future gains, what makes something value,
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This note was uploaded on 09/08/2011 for the course ECON 101 taught by Professor Gulati during the Spring '11 term at Columbia.

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Lecture Notes 2 - 26/01/11 Comparative Statics: Start at...

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