AGENDA: Tuesday 9/8

AGENDA: Tuesday 9/8

? QOD #9: Market Review ? Review of CH 3 Problems (Aca Ext) ? HW Review #2,3 ? Consumer & Producer Surplus ? HW: Prep Ch 3 Free Response Quiz 9/10

? Read pp 75-84 ? Questions #3,4 & Problems #1,2

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QOD #9: Market Reveiw

Peaches and nectarines are substitute goods. A)Joyce, a producer in the peach industry, discovers a technological breakthrough that only reduces the cost of producing peaches. Explain how the change in technology will affect each of the following for Joyce.

i. Quantity of peaches produced ii. Price of peaches iii. Short-run profits

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QOD #9: Market Reveiw

B) Now assume that all other peach-producing firms adopt the new technology. Explain how the new technology will affect each of the following in the peach-producing industry.

i. Price of peaches ii. Quantity of peaches produced

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QOD #9: Market Reveiw

C) This new technology is not applicable to the production of nectarines. Expalin how the change in the peach industry will affect each of the following in the nectarine industry.

i. Price of nectarines ii. Quantity of nectarines

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Market Failures

? Market fails to produce the right

amount of the product

? Resources may be: ? Over-allocated ? Under-allocated

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