Econ 2023 1st Edition Lecture 4 Outline of Last Lecture I. Wrap up from utility II. Start on chapter 3 notes dealing with:a. Demand, supply, and equilibriumb. Market behaviors and outcomesOutline of Current Lecture II. Market behaviors and outcomes:a. Supplier side of the market.b. And the source of supply with all the parts to it.Current Lecture2. Supply: Supplier side of the market.a. Supply: refers to the quantity of a product that producers are willing and able to sell ata given price, ceteris paribus. b. The source of supply: Like consumers, producers (sellers, or suppliers) seek to make themselves as well off as possible.i. In general, economists assume that producers maximize profit (π)ii.π = total revenue and total costs (profit)1. Price-key determinant of demand: price provides a signal and offers incentive. a. Incentive: to produce and supply at a good price, also to keep cost down so that the profit will be bigger.c. “Law of Supply”: ceteris paribus- when price is low, quantity supplied is low. And whenprice is high, quantity supply is high. So Price and Quantity supply are positively related. Has to do with incentives! i. Why is there that positive relationship? Incentives and the law of diminishing returns. d. “quantity supplied” vs. “quantity”:i. If price is small then will supply fewer product. If price is big then will supply more product.e. Non-price determinants of supply:i. Cost: price of inputs, technology, government taxes, subsidies, regulations, etc.ii. Expectations.These 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.iii. Prices of other goods.iv. Number of suppliers.f. Summing up supply:i. Producer behaviorii. Law of Supply-direct relationship between1. Price and quantity demand.iii. Other determinants of demand1. Costsa. Inputs, technology, and government
View Full Document