ECO105Y1 Lecture Notes - Lecture 4: Economic Surplus, Deadweight Loss, Demand Curve
Document Summary
Markets : the interactions between buyers and sellers. Always has a negotiation between a buyer and a seller in an exchange. Property rights : laws of ownership of physically, financial, and intellectual property. Informal and formal rules apply to ensure every party is treated equitably. Prices are the outcome of a market process of competing bids and offers. Prices come from the interaction of demand and supply. Shortage/surplus : quantity demanded exceeds/is less than quantity supplied. Which leads to companies increasing supply and fixing shortage. Companies are always reacting to market changes and adjusting prices. If campers voluntarily pay the prices set, there is cooperation between consumers/campers and the parks. Market-clearing price : the price that equalizes quantity demanded/supplied. Equilibrium price : the price that equalizes quantity demanded/supplied, balancing competition and co-operation, less tendency for change. Increase in supply, price falls, increase in quantity demanded.
