1. Clicker Check Question: Have you taken a calculus course? 1.Never. 2.In high school but not college. 3.I am taking my first calculus course this term. 4.I have completed a college calculus course.

2. The demand curve is given by P=100-Q and the supply curve by P=20+4Q. The competitive equilibrium Quantity is 1.Q=80 2.Q=44 3.Q=28 4.Q=20 5.Q=16

3. Solving for Equilibrium Quantity Demand Curve P=100-Q Supply Curve P=20+4Q Two equations in two unknowns. Supply curve crosses demand curve where 100-Q=20+4Q. This happens where 80=5Q or Q=16

4. The demand curve is given by P=100-Q and the supply curve by P=20+4Q. The competitive equilibrium Price is 1.P=84 2.P=80 3.P=64 4.P=24 5.P=20

5. Solve for Equilibrium Price We found that Q=16. We know from demand equation that P=100-Q. So P=84

6. And on to our main lecture…

7. The price of a good rises and so does the quantity sold. These observations are consistent with: 1.An upward shift of the supply curve. 2.A downward shift of the supply curve. 3.An upward shift of the demand curve. 4.A downward shift of the demand curve.

8. With upward sloping supply, if Demand Curve shifts up, Price and Quantity both rise. Quantity Price Old Equilibrium New Equilibrium Demand curve shifts up

9. If the supply curve shifts upwards, we expect 1.Price and quantity both rise. 2.Price rises, quantity falls. 3.Price and quantity both fall. 4.Price falls, quantity rises.

10. Here is the picture. Old equilibrium New equilibrium Quantity Price Supply curve shifts up.

11. And now back to our lecture…