ECON 1101 1st Edition Lecture 6Outline of Last Lecture I. Supply Curvea. Law of Supplyb. Causes of Supple Shiftsi. Price of Inputii. Number of Sellersiii. TechnologyOutline of Current Lecture II. Wrap up of Supply and DemandIII. MobLab Experiment DiscussionIV. Introduction to Elasticitya. Kinds of ChangeCurrent LectureI. Wrap Up of Supply and Demanda. If just the demand shifts, the price of substitute shifts.i. EXAMPLE: coke has a recall, the demand for pepsi increases, and the priceof pepsi increases.b. If they both shift, such as the price and the substitute change.i. Without the value, it is impossible to know how much each has changed to make an exact prediction.II. MobLab Experiment Discussiona. Our market was moved by an invisible hand, that caused us to move towards equilibriumb. Sellers typically do worse.c. The key is to SELL when buyers are unsure.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.d. (Explained experimental data graphs)III. Elasticitya. Last class we discussed the DIRECTION of effects.b. Beyond direction, we want to know the magnitude of the shifts/movements.i. Example: the Quantity goes down when the price increases but BY HOW MUCH?c. Elasticity: Responsiveness of supply and demand to changei. For right now we will only look at demand.d. What Kinds of Change?i. Priceii. Incomeiii. Price of Related Goode. We want to have a way of comparing goods.f. Less important goods are more elastic.i. We cannot find by using slope because the units would be off. ii. We get units by using
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