ECON-2110 Lecture Notes - Lecture 9: Excess Supply, Shortage, Demand Curve

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viridianmink65

27 Dec 2015

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Topic 3c: putting supply and demand together - where do prices come from? . Equilibrium price and quantity = balance - in markets, we see one price: what happens where d and s intersect? (demand and supply curves) The intersection = equilibrium (which is market price and quantity what we see on market) Quantity supplied > quantity demanded ---- excess supply (more units for sale than demanded) Qs < qd ---- excess demand (more units demanded than are supplied) ** if we see change in either price or quantity in a market, we can conclude that supply or demand has changed. Topic 3d: shifts in demand and supply or why do market prices and quantities change? (why&how) Law of supply and demand: price of any good adjusts to bring quantities of the good supplied and demanded into balance. If we are in equilibrium, why do prices change? changed. Demand or supply: changes in p and q are frequent.

Related Questions

The generalized demand and supply functions for good X are

Qd = 10 -2Px - 4P_Y + M Qs = 10 + 2P_X

Where:

Q_D = quantity demanded of good X

P_X = price of good X

M = consumer income

P_Y = price of good Y

Q_S = quantity supplied of good X

P_X = price of good X

A. Are good X and good Y substitutes or complements? Why?

B. Is good X a normal good or an inferior good? Why?

C. What is the demand function when P_Y = $4 and M = $600?

d. Use the demand function you found in part c. and solve for the equilibrium price (P_o) and the equilibrium quantity (Q_o).

e. Find the inverse demand function and the inverse supply function.

f. Sketch this market.

periwinklechimpanzee73

Who bears the primary costs of a rent control program?

landlords

renters that get rent-controlled apartments

taxpayers

the wealthy

Assume the demand for sushi is Qd = 180 - 3P, where Qd is quantity demanded and P = price in dollars. The supply of sushi is Qs = 80 + 5P, where Qs is quantity supplied (and P is, again, price in dollars). A price of $20 would result in:

	A.	Excess supply of 60
	B.	Excess supply of 120
	C.	Excess supply of 140
	D.	Excess demand of 140

US agricultural price supports are politically popular because

They have no adverse impacts

The US would have food shortages without them

The benefits accrue to a large number of voters and the costs are paid by a small number of voters

The costs are spread out among millions of people

	A.	$15.50
	B.	$12.50
	C.	$10
	D.	$15

Price floors and ceiling prices:

cause the supply and demand curves to shift until equilibrium is established.

both cause surpluses.

interfere with the rationing function of prices.

A change in the price of a good leads to a change in ________, which leads to a ___________

quantity supplied; shift of the supply curve

supply; shift of the supply curve

quantity supplied; movement along the supply curve

When the supply of a product increases, this implies that

the price of the product first declined

more will be purchased at the same price

producers will be willing to accept a lower price for each unit sold

demand for the good must have increased

producers will offer less for sale at each possible price

If there is a excess demand for product X:

fewer resources will be allocated to the production of this good.

the price of the product will rise.

the supply curve will shift to the left and the demand curve to the right, eliminating the shortage.

the price of the product will decline.

Which of the following will occur when there is a simultaneous decrease in demand and a decrease in supply?

B and D both necessarily occur

An increase in equilibrium quantity

A and C both necessarily occur

An increase in price

A and D both necessarily occur

A decrease in price

A decrease in equilibrium quantity

Velcro is becoming more and more popular for a variety of uses, including as fasteners for shoes. What should happen to the equilibrium price and quantity for shoelaces as a result?

Both price and quantity should decrease.

Price should increase and quantity decrease.

Both price and quantity should increase.

Price should decrease and quantity increase.

Nothing.

If the government imposes a ceiling price on apartment rents, we would expect to observe all of the following except one. Which is the exception?

	A.	conversion of some apartment complexes to condos
	B.	a shortage
	C.	an increase in the number of new apartment complexes being built
	D.	lower maintenance of existing apartments
	E.	long waiting lists for apartment seekers

supply; movement along the supply curve

both cause shortages.

chocolatebadger640

Suppose the local crawfish market is perfectly competitive, with the following market demand and supply: Market Demand: QD = 6500 - 100P Market Supply: QS = 1200P, where market quantity demanded (QD) and market quantity supplied (QS) are measured in pounds and price (P) is measured in dollars per pound. Assuming all firms have identical costs, suppose the typical firm in the market has the following short-run total cost (TC) and marginal cost (MC), with q being the quantity produced by the firm: Total Cost: TC=722+q²/200 Marginal Cost: MC=2q/200

A. What is the price at which a firm is indifferent between producing in the short-run and shutting down production?

B. Determine the market equilibrium price and quantity of crawfish, the output supplied by each firm, and the profit of each firm. How many firms must currently be in this market?

C. Based on your answer to B, would you expect to see entry or exit in the long-run? How would this impact the price of crawfish over time, ceteris paribus?

raspberryjackal666

ECON-2110 Lecture Notes - Lecture 9: Excess Supply, Shortage, Demand Curve

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