ECON-2110 Lecture Notes - Lecture 20: Demand Curve, Marginal Cost

34 views3 pages

browncricket202

1 Nov 2017

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Chapter 4: shifts in demand and supply, or why do market prices and quantities change? . Objective: to understand why changes in demand (marginal benefits) and supply (marginal costs) occur, and how this affects price and quantity in markets. Recap of change in demand: we draw a demand curve assuming, taste, income, price of related goods, size of market, expectations are held constant if any of these factors change, marginal benefits change. Recap of change in supply: we draw a supply curve assuming. Input prices, technology, size of market, size of market, expectations are held constant if any of these factors change, marginal cost changes. Changes in price and/or quantity: changes in the market price and/ or quantity occur only if demand or supply has shifted. Three steps to figuring the effect of an event on price and quantity: 1. Decide whether supply, demand, or both have shifted: 2. Decide in which directions the shift occurred: 3.

Related Questions

Section I: Supply & Demand Analysis (Chapter 3) In each of the following 10 questions, show what happens to the Demand, Supply, equilibrium price and equilibrium quantity of copper. Show an increase by use of +, a decrease with a -, and no change with 0 (thatâs a zero, not an O or o). Although in the real world, both supply and demand are constantly changing, in the model we are using here, only one curve shifts per problem. So, if demand goes + or -, supply will be 0, and vice versa. In no case will equilibrium price or equilibrium quantity be 0. You may want to sketch out the supply and demand curve analysis to help in answering the questions. You will also be required to identify which determinant (of demand or supply) has changed, thus causing the shift. Rather than actually writing in the determinant, fill in the blank with the number that corresponds to the relevant determinant, based upon the following list. You may want to refer to the lecture notes entitled Determinants of Demand & Supply in the COURSE CONTENTS section. For questions 1 - 10, refer back to this list. Some you may want to use more than once, some you won't use at all. Copy and paste this list to an MS Word document and then print it out if you don't want to keep scrolling back and forth between this list and the question you're trying to answer. Determinants of Demand: 1. Change in buyer tastes 2. Change in number of buyers 3. Change in income 4. Change in the prices of related goods (on the demand side) 5. Change in consumer expectations Determinants of Supply: 6. Change in resource prices 7. Change in technology 8. Changes in taxes and subsidies 9. Change in prices of related goods (on the supply side) 10. Change in producer expectations 11. Change in the number of suppliers. For example, if a rightward shift in the supply curve for an item were caused by an increase in the number of producers of that item, you would indicate this be entering 11 into the relevant blank. If the demand curve shifted to the left because people didn't like that item anymore (like mimeograph machines), you'd enter 1 into the blank. Q#1 President Trump signs into law a bill that says the U.S. government will subsidize the construction of new homes, office buildings, bridges, and other infrastructure projects requiring copper. Demand; Supply: Equilibrium Price: Equilibrium Quantity Exchanged; Which determinant changed?: Q#2 Non-capitalist economies around the world begin a phase of rapid economic development, construction and growth, becoming increasingly wealthy, as they begin to adopt more capitalist institutions, as in China, Russia, and the former communist countries of East Europe. Demand; Supply: Equilibrium Price: Equilibrium Quantity Exchanged: Which determinant changed?

11.The concept of total surplus is a useful but imperfect measure of:

A. wellbeing

B. comparative advantage

C. market power

D. price elasticity of demand

12.Assume that burgers and pizzas are substitute goods in consumption only. When the burger price increases we will see which of the following changes in the pizza market?

A. An increase in demand and an increase in supply

B. An increase in demand and an increase in the quantity supplied

C. An increase in the quantity demanded and an increase in supply

D. An increase in the quantity demanded and no change to the quantity supplied

13.If the current price in a competitive market is $10 and the minimum of the the average total cost curve for a representative firm is $12, what is likely to occur to the market supply curve and the market price?

A. Supply will decrease and the price will rise

B. Supply will decrease and the price will fall

C. Supply will increase and the price will rise

D. Supply will increase and the price will fall

coralhyena258

The market demand curve

a. slopes upward.

b. is found by vertically adding the individual demand curves.

c. represents the sum of the quantities demanded by all the buyers at each price of the good.

d. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good.

When we move along a given demand curve,

all nonprice determinants of demand are held constant.

only price is held constant.

all determinants of quantity demanded are held constant.

d. income and price are held constant.

When the price of a good or service changes,

	a.	there is a movement along a given demand curve.
	b.	the demand curve shifts in the opposite direction.
	c.	the supply curve shifts in the opposite direction.
	d.	the demand curve shifts in the same direction.

ECON-2110 Lecture Notes - Lecture 20: Demand Curve, Marginal Cost

Document Summary

Get access

Related Documents

ECON-2110 Lecture Notes - Lecture 6: Prediction Market, Invisible Hand, Opportunity Cost

ECON-2110 Lecture Notes - Lecture 5: Marginal Cost, Economic Surplus, Cotton Gin

ECON-2110 Lecture Notes - Lecture 6: Demand Curve

Related Questions