ECON 101 Study Guide - Ceteris Paribus, Demand Curve, Economic Surplus
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ECON 101 Full Course Notes
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Free market market not controlled by government. When price increases, additional sellers with higher opportunity costs will also sell result of principle of increasing opportunity cost: as production of product. P* = ps = pd: q* equilibrium quantity, quantity supplied = quantity demanded, p* equilibrium price, supply price = demand price. P* = (a + bp*) = (c dp*) P* = (c a) / (b + d) Q* = c d [(c a) / (b + d)] The equilibrium principle: a market in equilibrium leave no unexploited opportunities for individuals. Decrease supply = supply shifts left/upward: equilibrium price increases, equilibrium quantity falls based on any changes to production costs. Major factors (increase in supply): changes in input (decrease in cost of labour, materials, etc, technology (improved to reduce cost of production of good, increase in subsidy, increase in number of firms in market.
