ECON 102 1st Edition Lecture 6 Outline of Last Lecture I Competitive Market II Laws of Demand a Things that Remain Constant i Prices of Related Goods ii Incomes b Demand Curve Outline of Current Lecture 1 Demand Function a Individual Examples 2 Supply Schedule a Supply Curve Shifts and Moves Current Lecture Demand Function Q F P I T E P C Shift Variables o o o o o o o Q Quantity demanded of x P Price of x I Income Normal Inferior T Tastes and Preferences E Expectations P Price of related goods Substitutes Compliments gas automobile C Number of Consumers When writing a function the first step is to isolate the variable to identify the shifts Ex People realize bagels are fattening o Q F P I T E P C o Taste Preference is changing and since this is a shift the graph would move Ex People have less time to cook breakfast o Q F P I T E P C o Taste Preference is changing and since this is a shift the graph would move 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 Ex A cure for lung cancer is found impact on cigarettes o Q F P I T E P C o Those who haven t smoked before may start and those that already do may begin to smoke more Ex Report says chocolate has significant health benefits impact on chocolate o Q F P I T E P C o Taste Preference is changing and since this is a shift the graph would move Tastes Preferences isn t just likes and dislikes but also beliefs If a consumer believes something they re tastes or preferences may change Ex Income falls Assume hamburgers are normal goods o Q F P I T E P C o Income is a movement factor not a shift factor move down Ex Income falls Assume hamburgers are inferior goods o Q F P I T E P C o Income is a movement factor not a shift factor move up Supply Schedule A supply schedule shows how much of a good or service would be supplied at different prices o Most supply slopes should be upward no downwards in this class A supply curve shows graphically how much of a good or service people are willing to sell A movement along the supply curve Shifts of the Supply Curve o Any increase in supply means a rightward shif of the supply curve at any given price there is an increase in the quantity supplied o Any decrease in supply means a lefward shif of the supply curve at any given price there is a decrease in the quantity supplied Causes to shift a Supply Curve o Changes in input prices An input is a good that is used to produce another good o Changes in the prices of related goods and services o Changes in technology o Changes in expectations o Changes in number of producers Equilibrium Equilibrium in a competitive market When the quantity of a good equals the quantity supplied of that good Equilibrium Price Price at which equilibrium in a market occurs Market Clear price Supply Function Q F P P T N E P Equilibrium Price Q Equilibrium Quantity Q Q most cleaning conditions Q Q Excess Supply SS Q Q Excess Demand DD
View Full Document
Unlocking...