ECON 200 Lecture Notes - Lecture 9: Shortage, Market Clearing, Demand Curve

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ivorysea-lion839

30 Aug 2018

School

University of Arizona

Department

Economics

Course

ECON 200

Professor

ALL

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ECON 200 Full Course Notes

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Document Summary

No surplus or shortage at equilibrium (quantity supplied = quantity demand) If markets are left by themselves they will always tend to equilibrium. At the equilibrium price, the quantity of the good that buyers are willing and able to buy exactly balances the quantity that sellers are willing and able to sell. Surplus - a situation in which quantity supplied is greater than quantity demanded aka excess supply. Falling prices, in turn, increase the quantity demanded and decrease the quantity supplied. Shortage - a situation in which quantity demanded is greater than quantity supplied aka excess demand. Law of supply and demand: the price of any good adjusts to bring the quantity supplied and quantity demanded for that good into balance. When analyzing how some event affects the equilibrium in a market, we proceed in three steps. 1. we decide whether the event shifts the supply curve, the demand curve, or, in some cases, both.

Related Questions

1. Market equilibrium occurs when

a. demand equals supply

b. quantity demanded equals quantity supplied

c. The consumer expectations match the producer's expectations

d. Efficiency and equal distribution are achieved

2. If a surplus exists in a market, then

a. Price is above market equilibrium and quantity demanded is less than quantity supplied

b. Price is below market equilibrium and quantity demanded is less than quantity supplied

c. Price is above market equilibrium and quantity demanded is greater than quantity supplied

d. Price is below market equilibrium and quantity demanded is greater than quantity supplied

3. When the price falls below market equilibrium

a. A surplus occurs

b. A shortage occurs

c. There will be an increase in quantity supplied

d. There will be a leftward shift of the supply curve

amethysttrout886

1. Assume the equilibrium price of product Z is $10. A decrease in the current price from $14 to $12 will cause an increase in the quantity:

A. Supplied, a decrease in the quantity demanded, and a decrease in the market surplus.

B. Supplied, a decrease in the quantity demanded, and a decrease in the market shortage.

C. Demanded, a decrease in the quantity supplied, and a decrease in the market surplus.

D. Demanded, a decrease in the quantity supplied, and the market shortage is eliminated.

E. Demanded, a decrease in the quantity supplied, and a decrease in the market shortage.

2. The Wall Street Journal (newspaper) of August 24, 2016, reported that the Chinese government recently increased the demand for wheat. When an economist says the demand for wheat has increased, she means that:

		A. The demand curve for wheat has shifted to the left.
		B. The price of wheat has increased and, as a result, consumers are buying a larger quantity of wheat.
		C. Consumers are now willing and able to purchase more wheat at each possible price.
		D. The price of wheat has decreased and, as a result, consumers are buying a larger quantity of wheat.
		E. Consumers are now willing and able to make more wheat available at each possible price.