This document explains the concept of partial market equilibrium analysis, focusing on the principles of comparative statics and the effects of exogenous changes in demand and supply on market equilibrium.
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[...] Applicants are now "excluded" from the exchange because p*>the old reserve price (here, the slope is the same, which means that the behavior of the applicants remains the same)" The change in function leads to a shift in the curve which leads to a change in the equilibrium price which can potentially lead to a change in the equilibrium quantity (not in our case because the supply was rigid) AND WE STOP THE REASONING. Microeconomics ? study of direct consequences exogenous change in supply example: the number of housing units has increased, there are now 40 studios available. The new supply function is Q(O2)(p)=40. The shift of O leads to a decrease and therefore a new (340). [...]
[...] curve shifts to the left II) Equilibrium achieved by "negotiation" This is an equilibrium obtained by negotiation/competition between agents (competition between sellers but also between consumers) The equilibrium is the result of an adjustment process that assumes the flexibility of prices or quantities: if offer and rigid prices then more adjustment variables offer rigid/prices flexible ? negotiation at the price level negotiation on price: situation where decreasing offer and increasing demand. If at a certain price p1, D>O then p1 is not incentive for sellers. [...]
[...] modification of the demand function: becomes p1?Q(D)1 before the change p1?Q(D')1 after the change (in microeconomics, we note the derivative of a function as which is said: differential of with respect to endogenous change: the price of the good changes example: the state sets a minimum selling price for gasoline vehicles (9000? for this model). The equilibrium price in this example was 7000? Consequence: some consumers are penalized but the curve REMAINS THE SAME exogenous change in demand example: the number of housing applicants increases due to the arrival of students on the Rennes real estate market. [...]
[...] Then, some consumers accept to pay more (competition between consumers) ? price rises and we arrive at p2. Mechanism that will continue until and are reached negotiation on quantities : If Q1: quantity proposed at t1. Then, price of demand > price of offer. Competition between producers who will produce more (while increasing the price BUT the buyers are willing to pay more) ? [...]
