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Copy file name to clipboardExpand all lines: lectures/intro_supply_demand.md
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# Introduction to Supply and Demand
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## Outline
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## Overview
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This lecture is about some models of equilibrium prices and quantities, one of
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the main topics of elementary microeconomics.
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* social welfare as the sum of consumer and producer surpluses
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* relationship between equilibrium quantity and social welfare optimum
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Throughout the lectures, we'll assume that inverse demand and supply curves are **affine** functions of output.
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Throughout the lectures, we'll assume that inverse demand and supply curves are **affine** functions of quantity.
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("Affine" means "linear plus a constant".)
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("Affine" means "linear plus a constant" and [here](https://math.stackexchange.com/questions/275310/what-is-the-difference-between-linear-and-affine-function) is a nice discussion about it.)
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We'll also assume affine inverse supply and demand functions when we study models with multiple consumption goods in our {doc}`subsequent lecture <supply_demand_multiple_goods>`.
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plt.show()
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```
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In the above graph, an **equilibrium** price, quantity pair occurs at the intersection of the supply and demand curves.
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In the above graph, an **equilibrium** price-quantity pair occurs at the intersection of the supply and demand curves.
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