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Lecture 6

ECON 202 Lecture Notes - Lecture 6: Central Processing Unit, Substitute Good, Economic Equilibrium


Department
Economics
Course Code
ECON 202
Professor
Ephraim
Lecture
6

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CH 1,2,9 ON NEXT TEST
FEBRUARY 14
Demand is derived from the consumer
Supply is exactly the negative of the slope of the PPF and is also a cost curve because
they will never sell a product for less than its cost
Variables that shift market supply
Prices of inputs
Technological change
Prices of substitutes
Expected future prices
Changes in Prices of Inputs
Inputs are things used in the production of a good or service
Ex of inputs for smartphones: computer processor, plastic housing, labor
An increase in the price of an input means that the opportunity cost to produce is
higher, causing a decrease in supply
A decrease in the price of an input increases the profitability of selling the good,
causing an increase in supply
Technological Change
A firm may experience a positive or negative change in its ability to produce a given
level of output with a given quantity of inputs. This is a technological change
Changes raise or lower firms' costs, hence their supply of the good
Prices of Substitutes
Many first can produce and sell more than one product
An Illinois farmer can plant corn or soybeans. If the price of soybeans rises, he will
(supply) less corn.
Number of Firms
More firms in the market will result in more product available at a given price
(greater supply)
Fewer firms = supply decrease
Change in Expected Future Prices
If a firm anticipates that the price of its product will be higher in the future, it might
decrease its supply today in order to increase in the future
Change in supply vs. change in quantity supplied
This is a change in quantity supplied
-
A change in the price of the product being examined causes a movement along the
supply curve
This is a change in supply
-
Any other change affecting supply causes the entire supply curve to shift
Non-perishable products
B.
What types of products could be "stored" and effectively become a substitute good
for present consumption?
Lecture 6
Thursday, February 2, 2017
7:59 AM
ECON 202 Page 1
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