ECON 1 Lecture 9: ECON 1-Lecture 9-Shifts in Supply
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Comparative statics (change something and keeping everything else constant) Opportunity cost = 0 after paying for gas. Experiment 1: not sell unless the price is greater than cost. Experiment 2: sell anyway because of the fixed cost. Spend to buy a new one. -> choose 1 because is the fixed cost. Competitive equilibrium (vespa, lecture 8, slide 19) Comparative statics (vespa, lecture 8, slide 22) Supply curve shift to right (10 --> 30) --> equilibrium price = sh. Long run supply -- sunk costs are not longer sunk. Good fishing > bad fishing --> fishermen choose not to go fish ( not sank costs anymore) Number of fisherman adjust--> profits equaled out over time. Long run: sunk costs --> variable costs. Comparative statics: predict the effect of external causes on economic variables: draw supply & demand curve before changes --> equilibrium values, draw supply & demand curve after changes --> new equilibrium values, compare the equilibrium values.
