ECON 1051 1st Edition Lecture 11 Outline of Last Lecture I. About the Market II. How Market Eliminates Surplus and ShortagesOutline of Current Lecture I. Shifts In Supply and Demand a. Examples and GraphsII. Increase in Supply, Decrease in DemandCurrent LectureI. Shifts In Supply and Demanda. The above chart represents the market equilibrium for LED TVs. The market equilibrium is where S1 and D1 cross. b. What would happen if new firms entered the market and started producing LED TVs?i. The supply curve will increase, therefore supply curve (S1) will shift to theright ii. According to the new supply curve (S2), price decreases and quantity increases since S2 crosses D1 at a lower price point but a higher quantityThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute. PQS1D1PPa. Now assume the first chart above represents the market for Subway subs. The market equilibrium is where S1 and D1 crossb. If Jimmy John’s cuts their prices for subs then:i. Demand for Subway’s subs will decrease causing the demand curve (D1) to shift to the leftii. According to the new demand curve (D2), price decreases and quantity increases since D2 crosses S1 at a lower price point on the y-axis and a lower quantity point on the x-axis:II. Increase in Supply, Decrease in Demand: a. What will happen to equilibrium price and quantity if supply increases and demand decreases?i. An increase in supply means the good or service will become cheaper andmore available, causing a shift to the right in the supply curveii. A decrease in demand means the good or service will become cheaper and a little more available, causing a shift to the left in the demand curve1. Therefore: quantity is higher but this is dependent on the fact thatsupply was shifted more than demand a. Known as: relative magnitude
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