ECO100Y5 Chapter Notes - Chapter 5: Shortage, Black Market, Price Floor
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ECO100Y5 Full Course Notes
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Change in one market leads to changes in other markets: no market/industry is isolated from economy"s many other markets. Induced changes in other markets, lead to changes in irst market. Parial-equilibrium analysis; analysis of single market in isolaion, ignoring any feedbacks that may come from changes in other markets: used when speciic market is small relaive to enire economy, resuling in small feedback. General-equilibrium analysis; analysis of all economy"s markets simultaneously, including interacions among other markets: study of how all markets funcion together, account various relaionships and feedback efects among each market. Atempt to hold price at some disequilibrium value: some undervalue, result in shortage, some overvalued, result in surplus. Disequilibrium prices: if qd is less than qs, demand will determine amount exchanged, if qd is more than qs, supply will determine amount exchanged, quanity exchanged determined by lesser of qd or qs (short-side rule)