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class1 post - Class 1 Preview of Econ401 Class 1 Demand and...

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Class 1 Preview of Econ401
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Class 1 Demand and Supply 1 1 0 q p H Supply Demand
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Outline Predict Economic Outcomes Demand Supply Demand = Supply Predicting Equilibrium Changes: The Math Administrative Things: Overrides, Syllabus, Course Information, Problemsets, Midterms,…
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Outline Predict Economic Outcomes Demand Supply Demand = Supply Predicting Equilibrium Changes: The Math
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Predicting House Prices in Ann Arbor When Pfizer closed, almost everyone predicted a decrease in house prices And indeed, house prices fell… Why did people expect this to happen?
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Predicting House Prices in Ann Arbor When Pfizer closed, almost everyone predicted a decrease in house prices And indeed, house prices fell… Why did people expect this to happen? 1 1 0 q p OLD Supply Demand Excess Supply at the old price: Incentives for sellers to decrease prices People Leaving Ann Arbor sell Houses: Supply at every price increases Less People need Housing: Demand at every price Decreases p NEW
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Idea: Equilibrium as a Stable Point Equilibrium predicts position of ball Equilibrium is sustained by external forces: Gravity or Excess Supply/Demand Stable Point Unstable Point
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Equilibrium predicts position of ball Equilibrium is sustained by external forces: Gravity or Excess Supply/Demand Shocks to System change equilibrium in predictable way:
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class1 post - Class 1 Preview of Econ401 Class 1 Demand and...

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