ECON 102 1st Edition Lecture 7 Outline of Last Lecture I Demand Function a Individual Examples II Supply Schedule a Supply Curve Shifts and Moves Outline of Current Lecture 1 Examples of Equilibrium and Shifts of the Supply Curve 2 Market Responses and Outcomes Current Lecture Ex Market for a commodity steel market o Wages of Steel Workers rises o Price of Aluminum rises Case Similar Shifts in demand supply What is the impact on the steel market Aluminum is a substitute for steel S S Old Equilibrium New Equilibrium D D How a Market responds to a change in demand o An increase in demand leads to a rise in both the equilibrium price and the equilibrium quantity A decrease in demand leads to a fall in both the equilibrium price and the equilibrium quantity 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 How a Market responds to a change in supply o An increase in supply leads to a fall in the equilibrium price and a rise in the equilibrium quantity A decrease in supply leads to a rise in the equilibrium price and a fall in the equilibrium quantity Prediction of Outcome when supply and demand curves shift in opposite directions o When demand increases and supply decreases the equilibrium price rises but the change in the equilibrium quantity is ambiguous o When demand decreases and supply increases the equilibrium price falls but the change in the equilibrium quantity is ambiguous Prediction of Outcome when supply and demand curves shift in similar directions o When both demand and supply increase the equilibrium quantity rises but the change in equilibrium price is ambiguous o When both demand and supply decrease the equilibrium quantity falls but the change in equilibrium price is ambiguous
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