ECON 2010 Lecture Notes - Lecture 4: Demand Curve, Market Clearing, Public Auction

• School: University of Virginia
• Department: Economics
• Course: ECON 2010
• Professor: Elzinga Kenneth

Document Summary

All prices on a graph are what if prices. Hurricane norbert: journalistic thinking: damage will help rebuild the economy, economic thinking: ppc will shrink, hurt economy because there aren"t as many goods and services. Watch metaphor functionality is the most important aspect. If there is no equilibrium, in a pure market economy there will be no production. Also known as the market has cleared . People don"t need to know the concepts of a market to act within its laws. Surplus: quantity supplied > quantity demanded, price will fall. Shortage: quantity supplied < quantity demanded, price will rise. Increase in demand: quantity, price go up. Decrease in demand: quantity, price go down. Increase in supply: quantity goes up, price goes down. Decrease in supply: quantity goes down, price goes up. Normally, with market allocation, you won"t end up with a shortage or a surplus: an auction is nothing more than moving up the market demand curve to the equilibrium price.