ECON 1B03 Lecture Notes - Lecture 5: Luxury Goods, Shortage, Demand Curve

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ECON 1B03 Full Course Notes
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ECON 1B03 Full Course Notes
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Shifting often occurs in both curves, leading to changes in both p and q. Using diagrams to examine the effects on equilibrium is called comparative statics. Ex suppose there is an increase in demand for good demand shifts right price increases and quantity increases. Ex if price of input of production rises, supply will decrease. Supply shifts left, price increases, quantity demanded decreases. Ex a shift in both d and s. Ex if demand is given by qd = 100 -2p and qs=50+. 5p, and price is , there is a surplus of 12. 5 units. Total revenue, tr, the area of the rectangle formed by the values of price and quantity. A measure of how much the quantity demanded of a good responds to a change in price. The percentage change in qd over percentage change in p = ep.

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