经济学原理蔡教学（洪滨）Chapter3.pptVIP

The Shortage Case * At P2, price is below the market clearing price QD QS Price rises to the market-clearing price Market adjusts to equilibrium Changes in Market Equilibrium Equilibrium prices are determined by the relative level of supply and demand Changes in supply and/or demand will cause change in the equilibrium price and/or quantity in a free market * Changes in Market Equilibrium * Raw material prices fall S shifts to S’ Surplus at P1 between Q1, Q2 Price adjusts to equilibrium at P3, Q3 Changes in Market Equilibrium * Income Increases Demand increases to D’ Shortage at P1 of Q1 to Q2 Equilibrium at P3 and Q3 Changes in Market Equilibrium * Income increases and raw material prices fall Quantity increases If the increase in D is greater than the increase in S， price also increases Shifts in Supply and Demand When supply and demand change simultaneously, the impact on the equilibrium price and quantity is determined by: The relative size and direction of the changes The shape of the supply and demand curves Four cases of price and quantity changes (Table 3.6) * The Economics of Immigration One would expect that immigration into a region increases supply and pushes down wages Economic studies show that in the United States a 10% increase in the fraction of immigrants in the population reduces native wages by at most 1 % Why? New immigrants tend to move to cities with strong labor demand and quickly spread around the entire country while natives may move out if the wage is driven down * More Road, More Traffic? Traffic jams are the headache of city planners and ordinary people A possible solution is to increase road network More road will alleviate congestion According to some quantitative studies, the increase in the road capacity is exactly matched by the increase in traffic volume * Reminder: Review Chapter 3 Preview Chapter 4 Homework 1 d