ECON 1100 Lecture Notes - Lecture 4: Demand Curve, Comparative Statics, Shortage
23 Sep 2015
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Any price less than equilibrium price (6) the consumer is willing to buy more, but seller is willing to sell less; excess demand. Opposite when price is above ep, excess supply. Equilibrium price is the price in which the quantity demanded equals the quantity supply. Price is also known as the market clearing price. Excess demanded happens when qd is greater than qs. Excess supply happens when qd is less than qs. Disequilibrium price is the price when qd does not equal qs. Suppose there is an increase in demand -> demand curve shift right shift up and right; price up and quantity up -> movement along supply curve from a to b e price up and e quantity up. Decrease in demand, demand curve shifts to the left-> movement ? the supply curve (a to b) -> price down, quantity down. Increase in supply, supply curve shifts rights -> movement along demand curve a-b -> price decrease, quantity increase.
