Chelsea Katz ECON200 2 7 13 Lecture Notes the equilibrium price and equilibrium quantity in the butter market when price of margarine rises quantity and price of butter both go up Price rises and quantity falls when price of milk used to make butter increases When household incomes rise and butter is a normal good price and quantity both rise if butter was an inferior good quantity would go down and price would go down Increase in demand increase in price An increase in price does not result in an increase in supply but rather an increase in the quantity supplied The supply curve does NOT shift we just move along it Decrease in demand and increase in supply demand falls demand curve shifts to left increase in supply shift in supply curve to the right Quantity goes down because of decrease in demand and goes up because of increase in supply When both supply and demand change the impact on either price or quantity will be clear unambiguous But the impact on the other will be ambiguous unclear HW Assignment if there is a simultaneous change in supply or demand Work through all four problems Lobster market peaks in august how does the equilibrium price and quantity change from august to November prices are indetereminate and quantity falls
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