Chelsea KatzECON2002-7-13Lecture 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 insupply. - 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 quantitychange from august to November? = prices are indetereminate and quantity
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