ECO 105 1nd Edition Lecture 7 Outline of Last Lecture I. Demand FunctionII. EquilibriumIII. SupplyIV. Consumer/Producer SurplusesOutline of Current Lecture I. Applications of Supply and DemandCurrent LectureI. Applications of Supply and Demanda. Price Floori. Pm, Qm = market resultii. Pf, Qf = outcome with government interventioniii. WT = wealth transfer (from consumers to producers)iv. DWL = deadweight lossv. ∆CS < 0 and ∆PS < 0 therefore ∆SS < 0b. SubsidyThese 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.i. Subsidy = x = size of the subsidy per unit of production1. Think of this as a reduction in cost or a reduction in the price at which producers are willing/able to sellii. Qs = quantity subsidyiii. Pc = price consumer
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