1st Edition Econ 202 Lecture 9 Outline of Last Lecture I Adding market demand II What causes the market demand curve to shift III Firms supply and what affects it IV Supply curve V Supply curve shift Outline of Current Lecture I Market Supply Curve II Factors that affect market supply III Market Equilibrium IV Change in equilibrium Prices Peter s Eric s Market s Quantity Quantity Quantity Current Lecture I Market Supply Curve a Sum of all the firms in the market i Add horizontally ii 20 20 15 15 Price Price Eric s Supply Curve Market s Supply Curve 10 5 0 0 500 15 1500 800 2300 12 5 1200 600 1800 10 900 400 1300 7 5 600 200 800 5 300 0 300 2 5 0 0 0 10 5 10000 0 1500 500 1000 1500 2000 2500 Quantity Quantity Look at a price and see 2 competitors who are willing to supply and add them together Peter s Supply Curve 20 Factors that affect market supply a Anything that affects individual supply i Price of supply ii Technology b Another supplier 15 Price II 10 5 0 0 500 1000 Quantity 1500 III IV i It changes the number of suppliers ii More suppliers a shift to the right down Market equilibrium a Point Px Qx is an equilibrium because for each possible price we ask would we expect the price to change The equilibrium price is the only one we won t expect to change b Prices below Px result in shortage i Shortage when quantity demanded is greater than quantity supplied ii With shortage we expect prices to go up iii For any price less than Px we expect prices to change c Prices above Px i Quantity supplied is higher but quantity demanded is less and the result is surplus 1 Surplus quantity supplied is greater than quantity demanded ii Prices decrease in that situation iii When Px Qx no storage or suplus 1 In that case you will end up with Px because quantity demanded is equal to the quantity supplied prices will not change Change in equilibrium a Comparitive status what impact will a change in a ceteris paribus factor have on a market equilibrium i Use the three step process to find out 1 Does it affect supply or does it affect demand 2 How does it affect the curve 3 How does equilibrium price and quantity change b Example i Quantity of sodas supplied and D2 demanded in a month 1 2 seasons a summer June August b Rest of the year ii Graph is the rest of the year iii Now finding what happens in the summer by following the 3 steps 1 Demand is effected because it will be hot and people would want more soda 2 Curve shifts up or to the right 3 Equilibrium price goes up and quantity goes up 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 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