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ECN 001A Lecture Notes - Lecture 6: Economic Equilibrium, Demand Curve

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amberbear563
30 Jan 2019
School
UC-Davis
Department
Economics
Course
ECN 001A
Professor
David Rapson

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ECN 001A Full Course Notes
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ECN 001A Full Course Notes
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Document Summary

Firm raises or lowers the price based on the experiment. If surplus happened, the firm will typically lower the price (downward pressure). If shortage happened, the firm will typically raise the price (upward pressure). In a given price, when the quantity supplied is more than quantity demanded, surplus happened: surplus exerts downward pressure for the price. It is happened when the price is more than the equilibrium price. In a given price, when the quantity demanded is more than quantity supplied, shortage happened: surplus exerts upward pressure for the price. It is happened when the price is less than the equilibrium price.

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Related Questions

The following graph shows the monthly demand and supply curves in the market for teapots.
 

Use the graph input tool to help you answer the following questions. Enter an amount into the Price field to see the quantity demanded and quantity supplied at that price. 

The equilibrium price in this market is $_____ per teapot and the equilibrium quantity is _____ teapots bought and sold per month.

Complete the following table by indicating at each price whether there is a shortage or surplus in the market, the amount of that shortage or surplus, and whether this places upward and downward pressures on prices.

Price ($ per teapot) Shortage / Surplus Shortage or surplus amount (teapots) Pressure
60      
40      

 

Suppose the supply curve for Budweiser is given by Qs = 73 + 5P and the demand curve is defined in question 

a) What is the equilibrium quantity and price for a bottle of Budweiser?

b) When the market price of Budweiser is $2, is the market in equilibrium/shortage/ surplus? Explain.

c) If the market is in shortage/surplus, what is the amount of the shortage/surplus? [Hint: determine the quantity demanded and quantity supplied when P=2, and calculate the difference].

Market equilibrium and disequilibrium

The following graph shows the monthly demand and supply curves in the market for shirts.

Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.

The equilibrium price in this market is ........ per shirt, and the equilibrium quantity is........ shirts bought and sold per month.

Complete the following table by indicating at each price whether there is a shortage or surplus in the market, the amount of that shortage or surplus, and whether this places upward or downward pressure on prices.

            Price              Shortage or Surplus        Shortage or Surplus Amount       Downward/Upward 

     (Dollars per shirt)                                                    (Shirts)       

          40                        ...........                               ..........                                 ............

          60                        ...........                               ..........                                 ............