范里安微观经济学第九版Chapter 9.pptVIP

Chapter 9 Market Equilibrium Topics to be Discussed Market equilibrium Quantity tax and equilibrium Tax incidence Deadweight loss Market Equilibrium A market is in equilibrium when total quantity demanded by buyers equals total quantity supplied by sellers. Also called “market is cleared” Market Equilibrium p D(p), S(p) q=D(p) Marketdemand Marketsupply q=S(p) p* q* D(p*) = S(p*); the marketis in equilibrium. Market Equilibrium p D(p), S(p) q=D(p) Marketdemand Marketsupply q=S(p) p* S(p’) D(p’) S(p’); an excessof quantity supplied overquantity demanded. p’ D(p’) Market price must fall towards p*. Market Equilibrium p D(p), S(p) q=D(p) Marketdemand Marketsupply q=S(p) p* D(p”) D(p”) S(p”); an excessof quantity demandedover quantity supplied. p” S(p”) Market price must rise towards p*. Market Equilibrium We can calculate the market equilibrium price and quantity using D(p)=S(p) Can we calculate the market equilibrium using the inverse market demand and supply curves? Yes, it is the same calculation Pd(q)=Ps(q). Market Equilibrium the equation of the inverse marketdemand curve. And the equation of the inverse marketsupply curve. Market Equilibrium q D-1(q),S-1(q) D-1(q) = (a-q)/b Market inversedemand S-1(q) = (-c+q)/d p* q* At equilibrium,D-1(q*) = S-1(q*). Market inverse supply Market Equilibrium Two special cases: quantity supplied is fixed, independent of the market price, and quantity supplied is extremely sensitive to the market price. Market Equilibrium S(p) = c+dp, so d=0 and S(p) º c. p q q* = c Market quantity supplied isfixed, independent of price. Market Equilibrium S(p) = c+dp, so d=0 and S(p) º c. p q p* =(a-c)/b D-1(q) = (a-q)/b Marketdemand q* = c p* = D-1(q*); that is,p* = (a-c)/b. Market quantity supplied isfixed, independent of price. Market Equilibrium Market quantity supplied isextremely sensitive to price. S-1(q) = p*. p q p* Market Equilibrium Market quantity supplied isextremely sensitive to price. S-1(q) = p*.