[ECON 111] - Midterm Exam Guide - Everything you need to know! (13 pages long)

• School: Queen's University
• Department: Economics
• Course: ECON 111
• Professor: Ugurhan Gazi Berkok

Document Summary

Changes in one market leads to changes in many others (hard to predict) Partial-equilibrium analysis - single market (feedback effects from other markets ignored) General equilibrium analysis - all markets simultaneously, recognizing interactions. Policies attempting to hold price at a disequilibrium value, creating shortage or surplus. Quantity exchanged determined by lesser of quantity demanded or supplied. Finding quantity exchanged requires voluntary market transaction: qd < qs demand determines amount exchanged when qd remains with producer. Binding when set above equilibrium and raises price. Leads to excess supply (unsold surplus or government enters market to buy excess) Good for farmers and workers, allowed to sell at prices above free-market levels. Inelastic demand means producers earn more income in total: losses (selling fewer units) spread across producers. Firms worse off as workers get higher wage. Increase in costs by reducing use of labour. Higher supply of labour than demand for workers.