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equilibrium

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Anthony Fadly 1 year ago
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March 20 notes
Shortage
* A shortage exists when demand is in excess of supply for a period of time
* A shortage is when price is under equilibrium price
A shortage exists when demand is in excess of supply for a period of time
A shortage is when price is under equilibrium price
Surplus
* An economic surplus is the sum of all consumer and producer surpluses in an economy.
* It's the opposite of shortage, created when price is greater than equilibrium
* At a price higher than equilibrium, the quantity supplied is more than the quantity demanded
An economic surplus is the sum of all consumer and producer surpluses in an economy.
It's the opposite of shortage, created when price is greater than equilibrium
At a price higher than equilibrium, the quantity supplied is more than the quantity demanded
Price Ceilings
* Government imposed price control or limit
* used to protect consumers from prohibitively expensive commodities
* Price ceilings are usually set by law and are used to ensure fair and reasonable business practices
* protect low income individuals
* has no effect if the equilibrium price is lower than the ceiling
* forces a shortage if higher than equilibrium
Government imposed price control or limit
used to protect consumers from prohibitively expensive commodities
Price ceilings are usually set by law and are used to ensure fair and reasonable business practices
protect low income individuals
has no effect if the equilibrium price is lower than the ceiling
forces a shortage if higher than equilibrium
Price Floor
* Lowest price at which something can be sold
* Protects smaller suppliers from larger suppliers
* Prevents horizontal integration by deliberately taking losses on products to undercut competitors and run them out of business
* Government often buys excess
* Minimum wage
Lowest price at which something can be sold
Protects smaller suppliers from larger suppliers
Prevents horizontal integration by deliberately taking losses on products to undercut competitors and run them out of business
Government often buys excess
Minimum wage
Sticky Price
* Prices that do not immediately change
* Prices can be sticky while increasing or decreasing
* Occur naturally, not government imposed
* Gentrification
oo Buyer competition for houses, pushes out lower income residents
* Flexible prices
oo change all the time based on the economy
oo stocks, gas, plane tickets, cryptocurrency
Prices that do not immediately change
Prices can be sticky while increasing or decreasing
Occur naturally, not government imposed
Gentrification
Buyer competition for houses, pushes out lower income residents
Flexible prices
change all the time based on the economy
stocks, gas, plane tickets, cryptocurrency
Equilibrium
The point at which quantity supplied = quantity demanded

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- Flexible prices
- change all the time based on the economy
- stocks, gas, plane tickets, cryptocurrency

## Equilibrium

- The point at which quantity supplied = quantity demanded

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