ECO 108 Lecture Notes - Lecture 19: Economic Equilibrium, Demand Curve, Equilibrium Point

• School: University of Rochester
• Department: Economics
• Course: ECO 108
• Professor: landsburg

Document Summary

Let"s think about a good, say, cameras, which are produced both in the united states and in some other country, say, japan. The american demand curve is showing the total quantity that americans want to buy, depending on the price. The american supply curve shows the total quantity that americans want to sell. The equilibrium price is at the point where the curves cross. But japan produces equivalent cameras, and they are willing to sell these cameras in any quantity we want, at some price below the equilibrium price. Note we are assuming the american and japanese cameras are identical. If they were not identical, the analysis would be more complicated, although the bottom line would be similar. In this example consumers don"t care whether they get an american camera or a. Japanese camera, they just want the lowest price. The japanese cameras are sold throughout the world at the world price, shown by the horizontal line.