ECN 104 Lecture Notes - Lecture 3: Simple Algebra, Market Clearing, Economic Equilibrium

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9 Dec 2015
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Monopoly- markets that only have one seller and that seller can set the price. Because quantity of demand falls as the price rises and rises as the price falls we say that quantity demanded is negatively related to the price. Substitute goods are often goods that are used in the same place together. Increase in supply- any change that raises quanity supplied at every price, such as a fall in the price of sugar, shifts the curve to the right. Decrease in supply- any change that reduces the quantity supplied at every price shifts the supply curve to the left. Price of a good itself- represents a movement along the supply curve. Input prices, technology, expectations, # of sellers- shifts the supply curve. The equilibrium price is sometimes called the market clearing price because, at this price, everyone in the market has been satisfied: Buyers can buy all they want to buy. Sellers can sell all they want to sell.

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