ECON 201 Lecture Notes - Lecture 4: Demand Curve
ECON 201 – Lecture 4 – Chapters 4-5
*All charts and graphs based off or replicated by Joel Han in class
Supply Continued from last lecture…
Equilibrium – Quantity demanded is at the same point as quantity supplied
oEquilibrium represented on a table:
Price QSQD
$0 0 24
$1 5 21
$2 10 18
$3 15 15
oThe Row on the bottom is the equilibrium since QS and QD are equal
oRepresented on a chart:
Solving for equilibrium
oSolving using QS=QD=Q and PS=PD=P
oSupply Equation - PS=(1/5)QS+0
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oDemand Equation – PD = (-1/3)QD+8
Solving with table above:
PS=PD… (1/5)Q = (-1/3)Q+8… Add (-1/3)Q to other side… 8/15Q =
8… Multiply each side by 15/8… Q = 15
Surplus – Having more supply than demand
oSurplus @ $4… PD= (-1/3)QD+8… 4 = (-1/3)QD+8… Subtract 8 from each side…
-4 = (-1/3)QD… Multiply each side by -3… QD=12
oNext equation… PS= (1/5)QS… 4=(1/5)QS… Multiply each side by 5… Qs = 20
Surplus – QS-QD
o20-12 = 8
oSurplus Equals 8
Shortage – Demand is larger than quantity
oAmount of Shortage = QD-QS
oSame concept as Surplus
oExample: if we look at what happens if price is set to $2
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Econ 201 lecture 4 chapters 4-5. *all charts and graphs based off or replicated by joel han in class. Equilibrium quantity demanded is at the same point as quantity supplied: equilibrium represented on a table: 15: the row on the bottom is the equilibrium since qs and qd are equal, represented on a chart: Solving for equilibrium: solving using qs=qd=q and ps=pd=p, supply equation - ps=(1/5)qs+0, demand equation pd = (-1/3)qd+8. Ps=pd (1/5)q = (-1/3)q+8 add (-1/3)q to other side 8/15q = 8 multiply each side by 15/8 q = 15. Surplus having more supply than demand: surplus @ pd= (-1/3)qd+8 4 = (-1/3)qd+8 subtract 8 from each side . 4 = (-1/3)qd multiply each side by -3 qd=12: next equation ps= (1/5)qs 4=(1/5)qs multiply each side by 5 qs = 20. Surplus qs-qd: 20-12 = 8, surplus equals 8.
