Econ 240 7st Edition Lecture 7 Outline of Last Lecture I. Demanda. Change in Quantity Demanded b. Change in Demand c. The main factors that change demand curve:d. Prices of Related Goodse. A complement is a good that is consumed with another good f. Incomef.i. A normal good is a good for which:f.ii. An inferior good is a good whichg. Expectationsh. Number of Buyersi. PreferencesII. Supplya. Law of Supplyb. Individual Supply and Market SupplyOutline of Current Lecture II. The main influences on selling plans that change supply are:III. Prices of Related Goodsa. A substitute in production is good that can be produced in place of another goodb. A complement in production is a good that is produced along with another goodIV. Prices of Resources and Other InputsV. ProductivityThese 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.a. Productivity is output per unit of inputVI. Expectations Number of Sellers a. Market equilibrium occurs when the quantity demanded equals the quantity suppliedVII. Surplus or Excess SupplyCurrent LectureThe main influences on selling plans that change supply are:- Prices of related goods- Prices of resources and other inputs- Productivity - Expectations- Number of sellersPrices of Related Goods- A substitute in production is good that can be produced in place of another good- For examples: a truck and an SUV in an auto factory Supply of a good increases if the price of a substitute in production falls The supply a good decreases if price of a substitute in production risesA Complement in Production is a good that is produced along with another good- For example: cream is a complement in production of skim milk in a dairy Supply of good increases if price of one of its complements in production rises Supply a good decrease if price of one of its complements in production falls Price of Resources and Other Inputs- If its costs more to produced good, its supply deceasesProductivity2- Productivity is output per unit of input- An increases in productivity lower costs => supply decreases Expectations- Expectations about future prices influence supply - Expectations of future input prices also influence supplyNumber of Sellers- The greater the number of sellers in a market, the larger is supply Market equilibrium occurs when the quantity demanded equals the quantity supplied ▪ This happens at a particular price, called equilibrium price▪ The quantity bought and sold at equilibrium price is called equilibrium quantity▪ Market equilibrium: the intersection of the demand curve and supply curve▪ Shortage or excess demand the quantity demanded exceeds the quantity supplied ▪ Price rises until the shortage is eliminated and market is in equilibriumSurplus or Excess supply:- The quantity supplied exceeds the quantity demanded - Price falls until surplus is eliminated and market is in
View Full Document