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Chapter 3

ECO100Y1,CH3,notes.docx

6 Pages
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Department
Economics
Course Code
ECO100Y1
Professor
Robert Gazzale

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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=c­dPd  P­demand price in general  Q­quantity demanded c­horizontal  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 
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