ECON 208 Chapter Notes - Chapter 5: Plywood, Price Controls, Microeconomics

• School: McGill University
• Department: Economics
• Course: ECON 208
• Professor: Alex Hale

Document Summary

Econ 208 chapter 5 markets in action. Partial-equilibrium analysis examines a single market in isolation and ignores feedback effects from other markets. In general, this is appropriate when the specific market is quite small relative to the entire economy: most of microeconomics uses partial-equilibrium analysis, when economists study all markets together, they use general- equilibrium analysis. General-equilibrium analysis is more complicated because it involves the analysis of all the eco(cid:374)o(cid:373)(cid:455)"s (cid:373)a(cid:396)kets si(cid:373)ulta(cid:374)eousl(cid:455: economists must consider how all the markets function together, taking into account the feedback effects between individual markets. When the supply of a product is mobile between regions, prices in regional markets tend to move together. Hurricane increases demand for plywood in the equilibrium in florida is (cid:2868) and (cid:2868) in some other region, it is (cid:2868) and (cid:2868) Florida, driving price up to (cid:2869: however, the supply in region a is drawn for a given price of plywood in.