IntermediateMicroeconomics英文讲义Chapter16.docVIP

Chapter 16 Equilibrium Supply curves — measure amount the supplier wants to supply at each price . It is not really necessary to know where the supply curve or the demand curve comes from in terms of the optimizing behavior that generates the curves. See Figure 6.11. It is enough to know that a functional relationship between the price and the quantity that consumers want to demand or supply. Through the summation of horizontal individual demand curves, we obtain market demand curve. Similarly, we can add up their individual supply curves to get the market supply curve. With market demand curve and market supply curve, we find the equilibrium price and quantity. Equilibrium The market we talk about is competitive market. competitive market — each agent takes prices as outside of his or her control. many small agents, they have a negligible effect on the market price. a few agents who think that the others keep fixed prices equilibrium price— that price where desired demand equals desired supply. D(p*) = S(p*), solve this equation, we can obtain the equilibrium price , and equilibrium quantity . special cases — Figure 16.1. vertical supply—quantity determined by supply, price determined by demand horizontal supply—quantity determined by demand, price determined by ? In these two special cases, the determination of price and quantity can be separated. In the general cases, equilibrium price and equilibrium quantity are jointly determined by the demand and supply curves. an equivalent definition of equilibrium: where inverse demand curve crosses inverse supply curve , the left hand side is inverse demand function, the right hand side is inverse supply curve. examples with linear curves Suppose the demand function: , inverse demand function: ; Supply curve: , inverse supply curve: . Setting the demand price equal to the supply price and solving for the equilibrium quantity we have and Comparative statics We can see how equilibrium will change as the demand and supp