ECON 1BB3 Lecture 8: lecture eight

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apricotelephant517

9 Feb 2012

School

McMaster University

Department

Economics

Course

ECON 1BB3

Professor

Bridget O' Shaughnessy

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ECON 1BB3 Full Course Notes

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Document Summary

Equilibrium y equilibrium price: the price for which qs = qd y equilibrium quantity: the quantity that corresponds to equilibrium price. If qs > qd there is a surplus y y stocks build up and firms decrease price until equilibrium is restored y y people line up, firms increase price and sell more until equilibrium is restored. It is never possible when both shift together! Examples consumer income up (pencils are normal goods) There is a shift in prince and quantity: there is an up in use of standardized tests. Q1 the demand for pencil goes up and price too: up in the price of graphite. Q1 the price goes up and quantity goes down: down in the price of ink pens. Q1: the school year starts increase in demand. Q1 increase in quantity and price: new technology lowers the cost of producing pencils.

Related Questions

A decrease in input costs to firms in a market will result in a(n):

a) decrease in equilibrium price and an increase in equilibrium quantity.

b) decrease in equilibrium price and a decrease in equilibrium quantity.

C) increase in equilibrium price and a decrease in equilibrium quantity.

d) increase in equilibrium price and an increase in equilibrium quantity.

carminesardine703

The table below shows the demand and supply schedules for rolls of film.

Price	Quantity demanded	Quantity supplied
($ per roll)	(rolls per week)	(rolls per week)
2.00	3,000	1,000
3.00	2,500	1,500
4.00	2,000	2,000
5.00	1,500	2,500
6.00	1,000	3,000

a. Explain the concepts of demand, supply, and market equilibrium. What is the market equilibrium price for rolls of film? What is the equilibrium quantity?

b. If the price of film is $3 a roll, describe the situation in the film market. Is there shortage or surplus at this price? Explain how market equilibrium is restored.

c. A rise in income increases the quantity demanded by 1,000 rolls a week at each price. Draw a new table to account for this change in demand.

What will be the new equilibrium price? Which quantity will be traded? Explain how the film market adjusts to its new equilibrium.

d. The number of film production lines increases, and at the same time, people switch to digital cameras. How do these events influence demand and supply? Do they create a shortage or a surplus at the equilibrium price in part a? Describe how the price and quantity change.

The table below shows the demand and supply schedules for rolls of film.

Price	Quantity demanded	Quantity supplied
($ per roll)	(rolls per week)	(rolls per week)
2.00	3,000	1,000
3.00	2,500	1,500
4.00	2,000	2,000
5.00	1,500	2,500
6.00	1,000	3,000

a. Explain the concepts of demand, supply, and market equilibrium. What is the market equilibrium price for rolls of film? What is the equilibrium quantity?

b. If the price of film is $3 a roll, describe the situation in the film market. Is there shortage or surplus at this price? Explain how market equilibrium is restored.

c. A rise in income increases the quantity demanded by 1,000 rolls a week at each price. Draw a new table to account for this change in demand.

What will be the new equilibrium price? Which quantity will be traded? Explain how the film market adjusts to its new equilibrium.

ECON 1BB3 Lecture 8: lecture eight

ECON 1BB3 Full Course Notes

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