Macroeconomics Notes

Macroeconomics Notes - Supply- from producers point of...

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Supply - from producer’s point of view; shows costs of production. Principle of rising marginal cost (cost of a single unit)- all supply curves are upward sloping. Ex 1: How do we get market supply from individual supply curves for specific business? Assume only 2 producers of coffee. (graphs on paper) Why are P* & Q* equilibrium? What if supplies charge Pabove>P*= surplus (Qs>Qd); sellers will lower the price to get rid of excess (surplus) What if suppliers charge Pbelow<P*?= shortage (Qs<Qd); demanders will offer higher prices to make sure they get to purchase a unit. *Never say supply=demand!! Law of Demand- cetens paribus (all other things equal), the higher the price of a good, the lower the Qd (quantity demanded). And, the lower the price of a good, the higher the Qd. (graphs on paper) Qd= amount purchased at a particular price; refers to a single point on a demand curve A change in Qd- a movement from one point to another on the SAME demand curve.
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Macroeconomics Notes - Supply- from producers point of...

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