ECON101 Lecture : [ECON 101] - Supply and Demand's Effect on the Market Equilibrium

• School: University of Waterloo
• Department: Economics
• Course: ECON101
• Professor: Emanuel Carvalho

Document Summary

From first lecture to changes in demands and supplies and how they affect the. Focus on content done in class. Supply and demand"s effect on the market equilibrium of a commodity. Number of firms in the industry (fn) Increase in the firms, more production, increase in supply . Decrease in the firms, less production, decrease in supply . Technology reflects how factors of production can best be combined to produce a commodity. Increase in technology, more cost effective methods of production, firms will increase the supply . Supply and demand"s effect on the market equilibrium. Occurs at the price where the quantity demanded is equal to the equality supply. If the market is not at this condition, the market is not a equilibrium. At every point exceeding the equilibrium price: the quantity supplied > quantity demanded excess supply (surplus) increase in inventories downward pressure on price until equilibrium price is reached.