microbook_3e-page39 - further adjustment. Changes in...

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Market Equilibrium Excess Supply x Car sales at the beginning of a recession o Think back to end-2001 o Every other ad on TV/radio was a car commercial x Buyers know of excess supply, offer lower prices and increase quantity demanded x Automakers decrease production and accept a lower price At equilibrium there is no natural tendency for
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Unformatted text preview: further adjustment. Changes in Equilibrium Fall in Supply x Some crops freeze x Initially at equilibrium x After freeze, market supply is more limited x Supply curve shifts in x Shortage at initial price x Price bid up, some drop out of market x Other farms harvest more of frozen crop x New equilibrium Page 39...
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This note was uploaded on 12/29/2011 for the course ECO 311 taught by Professor Willis during the Fall '10 term at SUNY Stony Brook.

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