Dominick Salvatore Schaums Outline of Microeconomics, 4th edition Schaums Outline Series 2006

CHAP. 1] INTRODUCTION 11
(c)
At P . $3, QS . QD and a surplus of the commodity develops. This will cause P to fall toward $3. At
P , $3, QD . QS and a shortage of the commodity develops. This will push P up toward $3 (the symbol
“.” means “larger than,” while “,” means “smaller than”).
(A more detailed discussion of equilibrium is presented in Sections 2.9 to 2.11.)
COMPARATIVE STATICS AND DYNAMICS
1.16 In what aspect of the variable involved in the analysis is (a) comparative statics interested? (b) dynamics
interested?
(a)
(b)
Comparative statics is interested only in the equilibrium values of the variables involved in the analysis. In
microeconomics, these are the equilibrium price and the equilibrium quantity. Comparative statics thus
implies an instantaneous adjustment to disturbances to equilibrium.
Dynamics on the other hand, studies the movement over time of the variables involved in the analysis, as one
equilibrium position evolves into another. More specifically, dynamic microeconomics studies how the price
and quantity of a commodity change during the period of adjustment from one equilibrium point to another.
1.17 Suppose that the demand function for the commodity in Problem 1.13 changes to QD 0 ¼ 8000 – 1000P.
(a) Define the new market demand schedule for the commodity. (b) Draw the new market demand curve
on a figure identical to that in Problem 1.15. (c) What are the new equilibrium price and quantity for this
commodity?
(a)
Table 1.3
Price ($) 1 2 3 4 5 6 7 8
QD 0 7000 6000 5000 4000 3000 2000 1000 0
(b)
Fig. 1-5
(c)
The new equilibrium price is $4 and the new equilibrium quantity is 4000 units per time period. Comparative
statics compares the value of P and Q at equilibrium points E and E 0 .