ECO100Y5 Lecture Notes - Lecture 2: Economic Equilibrium, Demand Curve

• School: UTM
• Department: Economics
• Course: ECO100Y5
• Professor: Zachary Mahone

Document Summary

Review a few concepts from last week. Neither consumer or supplier has any power in changing the price of an item. How shifts in qd, qs effects equilibrium price and quantity. Discussed how eq changes (direction) for shifts in supply and demand. If demand curves shift, equilibrium price and quantity move in the same direction. If the supply curves shifts, equilibrium price moves in the opposite direction as the shift, quantity moves in the same direction. Did not discuss how much equilibrium changes for shifts. The key to this is how responsive supply and demand curves are. Sumarizing how demand for one thing responds to the price of something else. Basic idea: how does supply of some good change if demand shifts out. Qs(p) is not responsive to p (think fixed) Demand is elastic when quantity demanded is quite responsive to changes in price. When quantity demanded is relatively unresponsive to changes in price, demand is inelastic.