ECO100Y1 notes.docx

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Department
Economics
Course
ECO100Y1
Professor
Robert Gazzale
Semester
Fall

Description
ECO100Y1 Chapter 3 Supply and Demand Supply curve is a simple graph that shows how much of product for each possible price suppliers are willing to supply per period of time for each possible price. (Quantity per specific price) Quantity Supplied is a total amount that all suppliers are willing to produce and sell at a single specific price per period of time. Qs=a+bPs “a” is the horizontal intercept “b” reciprocal of the slope The demand curve is the graph that tells us the total quantity of product that buyers are willing to buy at each period. Quantity demanded – the total amount purchased by all buyers at a single specific price. Qd=c-dPd P-demand price in general Q-quantity demanded c- horizontal represents Market Equilibrium has no tendency to change. Both buyers and sellers are satisfied (lim). Market is in equilibrium when demand and supply are in counterbalance.  Supply curve: when price increases, the quantity supplied also increases (directly proportional)  Demand curve: when price increases the quantity demanded decreases (inversely related) Point of intersection between supply and demand graphs shows:  Equilibrium price- a price at which a good will sell  Equilibrium quantity- a quantity of a good that will be sold Excess supply- when prices exceed the equilibrium price, there is excess supply, or surplus, which is equal to the difference between quantities supplied and quantity demanded. Excess demand –when price lies below the equilibrium price there is excess demand or shortage, which is the difference between quantities demanded and quantity supplied. Equilibrium process depends on competition between small buyers and sellers. If all sellers are small no sellers have an ability to in
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