can-celebi.github.io/micro-business/L03
microeconomics · lecture 3 · open on your laptop
can't come?
Everyone opens the slides on their own device: polls, the pulse button and the own-words boxes are inside. microeconomics
040184 · ws 2026/27 · lecture 3
demand and supply
before we start can-celebi.github.io/micro-business/S03
Your comments: the link must work (Tolga publishes S03 with the /S03 short link), and ask about the interface. Cevdet's own-words results come next week, so no results slide tonight. your answers the survey you just did · anonymous · refresh
last class
understood now · average, 1 not at all … 5 very well
allocation mechanisms –
perfect competition –
barriers to entry –
today
known already · average, 1 nothing … 5 know it well
demand –
inverse demand –
law of demand –
supply –
inverse supply –
equilibrium –
shortage and surplus –
the interface
how useful · average, 1 not useful … 5 very useful
the chat –
the pulse –
reading material for each topic (up to 10 pages)?
% of you
yes –
maybe –
no –
problem set 1: have you looked at it?
% of you · Wednesday next to today
Wednesday today
not yet – –
looked at it – –
started – –
done – –
problem set 1: how hard was each question?
average, 1 easy … 5 very hard · and how many of you tried it · Wednesday next to today
Wednesday today
Q1 musical ticket (a) – –
Q2 musical ticket (b) – –
Q3 Mr Schmidt (a) – –
Q4 Mr Schmidt (b) – –
Q5 course average – –
Q6 Tom's boats (a) – –
Q7 Tom's boats (b) – –
Q8 the car from your parents – –
Your question (16:50): the survey results before the class slides. Same slide as Wednesday's L02-03r, with tonight's survey (S03). Loads on the lecturer screen only (press T + code on the hall PC); [refresh] picks up late answers; students see 'the results are on the screen'. The 'what else would help you?' texts and the per-question PS1 feedback stay on your lecturer page. today 1 demand
2 inverse demand
3 supply
4 synthetic market
5 equilibrium
6 shortage and surplus
demand for a single person your streaming subscriptions · each costs €10 a month
subscription 1st 2nd 3rd 4th worth to you (a month) €16 €12 €8 €4
how many do you keep?
answer
2
Keep one more as long as it is worth at least €10: 1st €16 ✓ · 2nd €12 ✓ · 3rd €8 ✗
Your liked gallery card C4 (07.10): Netflix · Spotify · Disney+ · Apple TV, sorted; values made even (€16, 12, 8, 4: €4 less each time) so a straight demand line fits exactly (your comment 16:05). Table, question, answer: nothing else on the slide. demand for a single person €16 1 €12 2 €8 3 €4 4 subscriptions P = 20 − 4Q Your comment: two demand curves, the staircase and the line. Parameters (your comment: do they make sense?): €16, 12, 8, 4 fall by €4 each, so P = 20 − 4Q hits each step's right corner exactly; €20 = the price at which you'd keep none (on the line; on the staircase already above €16). At €10: staircase 2 (16, 12 ≥ 10), line 2.5, the summary rounds the steps. The line appears one click after the staircase. your reservation prices for ChatGPT Plus reservation price: the most you would pay a month · 41 of you (lecture 1), sorted from the highest
rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 € 100 60 50 50 40 40 35 30 30 29 28 25 25 25 rank 15 16 17 18 19 20 21 22 23 24 25 26 27 28 € 20 20 20 20 20 20 15 13 12 10 10 10 10 10 rank 29 30 31 32 33 34 35 36 37 38 39 40 41 € 10 10 9 8 8 5 5 5 5 5 1 0 0
€50 €40 €30 €20 €10
€50 at €50: 4 of you buy each bar = one of you
€40 at €40: 6 of you buy each bar = one of you
€30 at €30: 9 of you buy each bar = one of you
€20 at €20: 20 of you buy each bar = one of you
€10 at €10: 30 of you buy each bar = one of you
Your comments: first your data, as in Raif's PDF §2; then price buttons on this table: pick a price → everyone whose reservation price is at least that price is highlighted ('these people buy') and the count is shown (e.g. €30 → 9, €20 → 20). €25 is not a button (it is the next slide's poll). how many of you buy? the rule · at a price, everyone whose reservation price is at least the price buys
€0 at €0: 41 of you buy each bar = one of you
€10 at €10: 30 of you buy each bar = one of you
€20 at €20: 20 of you buy each bar = one of you
€30 at €30: 9 of you buy each bar = one of you
€40 at €40: 6 of you buy each bar = one of you
€50 at €50: 4 of you buy each bar = one of you
€60 at €60: 2 of you buy each bar = one of you
€0 €50 €60
at €25 a month, how many of you buy?
answer
14
Ranks 1 to 14 would pay €25 or more; the 15th only €20.
€25 at €25: 14 of you buy each bar = one of you
Your comments: a slider instead of buttons (16:12), in our style and phone-friendly. It moves in €10 steps (€0 … €60) and marks who buys + how many; it never lands on €25, so it doesn't give away the poll; the answer card shows €25. your demand curve Your comment: the faded bars (your 41 reservation prices) stay visible behind the demand curve they build. The rank in line is the quantity: the 20th subscription goes to the 20th person, whose reservation price is €20. Slider (your comment 16:15): move the price, a dot slides along the staircase demand curve and the count updates (€5 steps; the €25 poll is already answered on the slide before). demand Demand: what quantity do consumers want to buy at a given price?
formula · Q = 40 − P
at €20, 20 of you buy
P Q €40 40 demand €20 20 → the line is drawn through your reservation prices (the faded bars)
Frank pp. 27–29 ('horizontal' interpretation). inverse demand Inverse demand: what price are consumers willing to pay for a given quantity?
formula · P = 40 − Q
for 20 subscriptions, €20
P Q €40 40 demand 20 €20 ↑ another way to read it: the 20th buyer, the marginal buyer, is willing to pay €20: the marginal willingness to pay
Same graph and same faded data as 'demand' (your comment: the data behind both). Frank's 'vertical' interpretation. law of demand demand form
price ↑ → quantity demanded ↓ (all else equal)
inverse form
the marginal willingness to pay decreases as the quantity increases: to sell one more, the price must fall to the next buyer in line, whose reservation price is lower (the marginal buyer)
the picture
a downward-sloping curve
Your text from L02-25. The marginal-buyer line now explains the inverse form (your comment 16:30); the two 'why' rows are gone. 'All else equal' prepares the shifts. demand function QD = f(P) for an AI subscription
demand
Q = 120 − 4P
120
if it were free, 120,000 would subscribe
− 4P
each €1 more a month: 4,000 fewer subscribers
at €20
120 − 4·20 = 40 → 40,000 subscribers
Your slide L02-22, first half (your wording). Text only: the graph comes with the answer of the next slide. inverse demand function ◀ 1 / 7 ▶
demand · Q = 120 − 4P (Q in thousands of subscribers)
what is the inverse demand? then draw it
answer
P = 30 − Q/4
4P = 120 − Q, then divide every term by 4.
30: at €30 or more, nobody subscribes · − Q/4: to win 4,000 more subscribers, the price must fall by €1
Q = 120 − 4P
4P = 120 − Q
P = 30 − Q/4 P Q €30 120 demand 40 €20 ↑
market · a music-streaming plan in Austria (P in € per month, Q in thousand subscribers)
demand · Q = 100 − 5P
what is the inverse demand? then draw it
answer
P = 20 − Q/5
5P = 100 − Q, then divide EVERY term by 5.
20: at €20 or more nobody buys · check: Q = 0 gives P = 20 in both forms
To draw it: price axis at €20, quantity axis at 100; join the two points.
Q = 100 − 5P
5P = 100 − Q
P = 20 − Q/5 market · an AI tutor app (P in € per month, Q in thousand users)
demand · Q = 60 − 3P
where does the demand curve meet the price axis and the quantity axis?
answer
price axis at €20, quantity axis at 60,000
Price axis: nobody buys, Q = 0 → 0 = 60 − 3P → P = 20.
Quantity axis: free, P = 0 → Q = 60 (60,000). Join the two points with a straight line.
Q = 0: 3P = 60 → P = 20
P = 0: Q = 60 market · printing at a print shop in Vienna (P in cents per page, Q in pages per day)
demand · Q = 160 − 4P
160 · if printing were free, customers would print 160 pages a day
− 4P · each extra cent per page: 4 fewer pages a day
what is the inverse demand? then draw it
answer
P = 40 − Q/4
Move the P-term to one side, then divide EVERY term by 4.
Check: Q = 0 gives P = 40 in both forms.
Read it: 40 = at 40 cents a page or more, nobody prints · − Q/4 = to sell 4 more pages a day, the price must fall by 1 cent.
To draw it: price axis at 40 cents, quantity axis at 160 pages; join the two points.
Q = 160 − 4P
4P = 160 − Q
P = 40 − Q/4 market · monthly memberships at Vienna gyms (P in € per month, Q in members)
demand · Q = 1600 − 40P
what is the inverse demand? then draw it
answer
P = 40 − Q/40
40P = 1600 − Q, then divide EVERY term by 40.
40: at €40 or more nobody buys · check: Q = 0 gives P = 40 in both forms
To draw it: price axis at €40, quantity axis at 1600; join the two points.
Q = 1600 − 40P
40P = 1600 − Q
P = 40 − Q/40 market · day passes at Vienna gyms (P in € per pass, Q in passes per day)
demand · Q = 240 − 6P
where does the demand curve meet the price axis and the quantity axis?
answer
price axis at €40, quantity axis at 240
Price axis: nobody buys, Q = 0 → 0 = 240 − 6P → P = 40.
Quantity axis: free, P = 0 → Q = 240. Join the two points with a straight line.
Q = 0: 6P = 240 → P = 40
P = 0: Q = 240 market · an AI writing-assistant app (P in € per month, Q in thousand users)
demand · Q = 150 − 2.5P
what is the inverse demand? then draw it
answer
P = 60 − 0.4Q
2.5P = 150 − Q, then divide EVERY term by 2.5.
60: at €60 or more nobody buys · check: Q = 0 gives P = 60 in both forms
To draw it: price axis at €60, quantity axis at 150; join the two points.
Q = 150 − 2.5P
2.5P = 150 − Q
P = 60 − 0.4Q Your comment on B3: ask for the inverse instead of a separate algebra slide. The explanation lines are your wording from L02-22. Wrong options: divided one term only · flipped instead of inverted · sign. Please let Sinan check. draw the demand curve demand · Q = a − bP
price axis · Q = 0 → P = a/b (the choke price)
quantity axis · P = 0 → Q = a
Your comment: sliders for a and b, the line and both intercepts move with them. Starts at Q = 120 − 4P (L02-22: €30 and 120). The draw questions themselves are now ▶ questions in the inverse-demand bank (L02-22b). supply any firm
producing more needs overtime, extra staff, new machines: each extra unit costs more (rising marginal cost)
miners
when the price is low, it barely pays the electricity: fewer miners mine
Your text from L02-26; the miners line reworded (your sweep request 18:05). Rising marginal cost: each extra unit comes from a less efficient machine / an owner who values the machine more. Mirror of the demand slide. supply: ten miners each miner has one machine · what differs is the electricity bill
miner (cheapest first) 1 2 3 4 5 6 7 8 9 10 cost of mining (€) 200 250 300 350 400 450 500 550 600 650
the price is €460: how many miners switch on their machines and mine?
answer
6
A miner mines when the price covers her cost: miners 1–6 (up to €450) · miner 7 needs €500.
1 2 3 4 5 6 7 8 9 10 €460 miners who mine
Your wording request: miners switch on and mine. PDF §6, made-up numbers. supply Supply: what quantity do sellers want to sell at a given price?
formula · Q = P/50 − 3 (for P ≥ €150)
at €450, 6 miners mine
P Q €150 supply €450 6 → Q = the number of miners who mine
Your comment: no 'marginal' here; what supply is, with the equation and the graph. The inverse supply follows as a question. inverse supply ◀ 1 / 7 ▶
Inverse supply: what price do sellers need to offer a given quantity?
what is the inverse supply? then draw it
answer
P = 150 + 50Q
Bring −3 across (it becomes +3), then multiply every term by 50. Keep the sign.
150: at €150 or less, nobody mines (on the line) · 50: each further miner needs a €50 higher price
Q = P/50 − 3
Q + 3 = P/50
P = 50Q + 150 P Q €150 supply 6 €450 ↑
market · freelance video editors on a jobs platform (P in € per hour, Q in hundred hours per week)
supply · Q = 4P − 100
what is the inverse supply? then draw it
answer
P = 25 + Q/4
Bring −100 across (it becomes +100), then divide every term by 4. Keep the sign.
25: below €25 nobody offers anything · check: P = 25 gives Q = 0
To draw it: start at €25 on the price axis; one more point: at €30, Q = 20.
Q = 4P − 100
4P = Q + 100
P = 25 + Q/4 market · seats of an AI note-taking tool sold by resellers (P in € per seat per month, Q in thousand seats)
supply · Q = 5P − 40
where does the supply curve start on the price axis, and how many are offered at €12?
answer
starts at €8; at €12, 20,000 are offered
Start: Q = 0 → 5P = 40 → P = 8. Below €8 nobody offers anything.
One more point: at €12, Q = 5·12 − 40 = 20 (20,000). Join the two points.
Q = 0: P = 40/5 = 8
P = 12: Q = 60 − 40 = 20 market · dog-walking by students (P in € per walk, Q in walks per week)
supply · Q = 5P − 15
what is the inverse supply? then draw it
answer
P = 3 + Q/5
Bring 15 to the other side (it becomes +15), then divide every term by 5.
Check: at P = 3 nobody offers a walk (Q = 0).
To draw it: start at €3 on the price axis; one more point: at €5, Q = 10.
Q = 5P − 15
5P = Q + 15
P = 3 + Q/5 market · cloud storage plans (P in € per month, Q in thousand plans)
supply · Q = 10P − 30
what is the inverse supply? then draw it
answer
P = 3 + Q/10
Bring −30 across (it becomes +30), then divide every term by 10. Keep the sign.
3: below €3 nobody offers anything · check: P = 3 gives Q = 0
To draw it: start at €3 on the price axis; one more point: at €5, Q = 20.
Q = 10P − 30
10P = Q + 30
P = 3 + Q/10 market · satellite launch slots on reusable rockets (P in € million per slot, Q slots per year)
supply · Q = 2P − 30
where does the supply curve start on the price axis, and how many are offered at €35?
answer
starts at €15; at €35, 40 are offered
Start: Q = 0 → 2P = 30 → P = 15. Below €15 nobody offers anything.
One more point: at €35, Q = 2·35 − 30 = 40. Join the two points.
Q = 0: P = 30/2 = 15
P = 35: Q = 70 − 30 = 40 market · sponsored posts by Instagram creators (P in € per post, Q in posts per week)
supply · Q = 0.5P − 60
what is the inverse supply? then draw it
answer
P = 120 + 2Q
Bring −60 across (it becomes +60), then divide every term by 0.5. Keep the sign.
120: below €120 nobody offers anything · check: P = 120 gives Q = 0
To draw it: start at €120 on the price axis; one more point: at €200, Q = 40.
Q = 0.5P − 60
0.5P = Q + 60
P = 120 + 2Q Your comment on B3: ask for the inverse instead of a separate slide. Wrong options: lost the sign · divided instead of multiplied · swapped intercept and slope. Please let Sinan check. inverse supply Inverse supply: what price do sellers need to offer a given quantity?
formula · P = 150 + 50Q
for 6 miners to mine, the price must be €450
P Q €150 supply 6 €450 ↑ another way to read it: the 6th miner, the marginal miner, needs €450 to switch on
Same template as demand / inverse demand / supply (your comment). After the question B2b, so it doesn't give the answer away. draw the supply curve supply · Q = dP − c
price axis · Q = 0 → P = c/d: below this price nobody sells
Your comment (same as for demand): sliders for c and d, the line moves; labelled: where it starts on the price axis (c/d) and one more point. A supply line has no quantity-axis crossing in the picture (Sinan). Starts at Q = 4P − 100: starts at €25; at €50, 100. The draw questions are ▶ questions in the inverse-supply bank (L03-B2b). a synthetic market 10 buyers and 10 sellers · each buyer wants one unit · each seller has one unit
1 2 3 4 5 6 7 8 9 10 buyers: the most they'd pay €100 €90 €80 €70 €60 €50 €40 €30 €20 €10 sellers: the least they'd accept €10 €20 €30 €40 €50 €60 €70 €80 €90 €100
the question
who should trade with whom, and at what price?
gain of a trade
buyer's value − seller's cost
Your sequence (07.10), after Raif's HowMarketsFindEquilibrium.pdf. Your comment: explain what is going on. The two rows say it: we try different matching rules. matching rule 1: same with same rule: each buyer trades with the seller whose cost equals her value, at that price
buyer €100 €90 €80 … €20 €10 seller €100 €90 €80 … €20 €10 gain 0 0 0 … 0 0
how much value do these 10 trades create?
answer
€0
Each buyer pays exactly what the good is worth to her; each seller gets exactly his cost.
Ten trades, and nobody is better off: more trades is not the same as more value.
Back from the parked list (your comment: where is matching 1?). matching rule 2: best with best rule: the buyer who values it most trades with the cheapest seller, the second with the second, …
buyer €100 €90 €80 €70 €60 €50 €40 €30 €20 €10 seller €10 €20 €30 €40 €50 €60 €70 €80 €90 €100 gain 90 70 50 30 10 −10 −30 −50 −70 −90
how many of these pairs should trade?
answer
5 pairs · total gain €250
The first 5 pairs gain; from the 6th pair on, every gain is negative (−10, −30, −50, −70, −90): those trades would destroy value.
No other matching creates more than €250.
90 + 70 + 50 + 30 + 10 = €250 Your comment: state the matching rule. Prices come next. price rule 1: all gain to the sellers the 5 best pairs trade · rule: every pair trades at the buyer's value
pair 100–10 90–20 80–30 70–40 60–50 price €100 €90 €80 €70 €60 seller gains 90 70 50 30 10 buyer gains 0 0 0 0 0
what is the total value created by these trades?
answer
€250
Sellers gain 90 + 70 + 50 + 30 + 10 = €250; buyers gain 0. Together: €250, the same as with any other prices.
All of it goes to the sellers (average price €80).
Back from the parked list (your comment: all gain to the seller, all gain to the buyer, any price in between). price rule 2: all gain to the buyers rule: every pair trades at the seller's cost
pair 100–10 90–20 80–30 70–40 60–50 price €10 €20 €30 €40 €50 seller gains 0 0 0 0 0 buyer gains 90 70 50 30 10
what is the total value created by these trades?
answer
€250
Buyers gain 90 + 70 + 50 + 30 + 10 = €250; sellers gain 0. Together: €250 again.
Now all of it goes to the buyers (average price €30). The price only decides who gets the €250.
Back from the parked list. price rule 3: any price in between rule: each pair agrees on some price between the seller's cost and the buyer's value
one pair
buyer €100 and seller €10 agree on €40
how much do the two gain together?
answer
€90
Buyer: 100 − 40 = 60 · seller: 40 − 10 = 30 · together 90 = 100 − 10.
The price only splits the gain; the total is the same at €40, at €100 or at €10.
now they agree on €60 instead: how much do the two gain together?
answer
€90 again
Buyer: 100 − 60 = 40 · seller: 60 − 10 = 50 · together 90.
Any price between €10 and €100 gives the same €90; only the split changes.
Your comment: a follow-up on the same slide (€60) to show that any price gives the same total. Your comment: you did not get this question. Now the rule is on top and the question asks one thing: the two gains together. the price splits the gain the total gain is the same at any price
rule 1 (buyer's value)
sellers get all €250, buyers 0
rule 2 (seller's cost)
buyers get all €250, sellers 0
any price in between
the €250 is shared
so
the price does not change how much value trade creates; it decides how much goes to the sellers and how much to the buyers
Your comment: the most important message of the price rules. Text only. one price for everyone: who buys, who sells? at each price: buyers with value ≥ price want to buy, sellers with cost ≤ price want to sell · the most eager buyers and the cheapest sellers trade · at exactly €50 the €50 buyer, and at exactly €60 the €60 seller, doesn't care whether to trade: counted in here (6); if they stay out, 5 buy and 5 sell
price €30 €40 €50 €55 €58 €60 €70 €80 buyers who want to buy (value ≥ price) 8 7 6 5 5 5 4 3 sellers who want to sell (cost ≤ price) 3 4 5 5 5 6 7 8 trades (the smaller number) 3 4 5 5 5 5 4 3 total value created (€) 210 240 250 250 250 250 240 210
Your comment: before asking which price makes buyers = sellers, show the counts and the value created at each price. Inside the band (€52, €55, €58) buyers = sellers = 5 and the value is the maximum €250 (Sinan: €52/€58 instead of €50/€60, so there's no tie with an indifferent person to explain); away from that band one side is short and value is lost. Columns appear one by one. one price for everyone in a market, everyone pays the same price
buyers (blue) from the highest value down · sellers (orange) from the lowest cost up · at a price in the shaded band, the 5 buyers above it trade with the 5 sellers below it
P Q €50 €60 €0 €100 1 2 3 4 5 6 7 8 9 10 buyers sellers 5 buyers and 5 sellers trade (solid steps) at which prices do buyers = sellers?
answer
any price from €50 to €60
Anywhere in that band: 5 buyers (€100 … €60) and 5 sellers (€10 … €50); exactly the 5 best pairs trade, €250 is created.
At exactly €50 the €50 buyer is indifferent, at exactly €60 the €60 seller. Below €50 more buyers than sellers; above €60 more sellers than buyers.
Your comments: the market clears at any price from €50 to €60, not at one price (€55 was only the middle; the table before has it as one of the columns). The graph shades the €50–€60 band instead of a single €55 line. a trading floor 20 AI traders, the same synthetic market
the traders · 10 AI buyers (values €10 … €100) and 10 AI sellers (costs €10 … €100); each knows only its own number
the floor · they post bids and asks in one chat, 4 rounds
what happened · round 1: prices from €40 to €70 · round 4: €60–65 · nobody knew the curves, yet the prices narrowed
No question (your comment). Bora's replay (lectures/L02/floor.html, no API key inside): play round 1 and round 4. Honest line: the bots end at or just above the top of the band (€60), not in the middle. Efficiency 84–96% of the €250 (random bots: 80%). The last row appears after the replay. equilibrium Equilibrium: demand and supply give the same quantity and the same price.
where demand and supply cross, both give the same Q and the same P
demand P = 750 − 50Q · supply P = 150 + 50Q
P Q €750 €150 demand supply Your comment: equilibrium = the same Q and the same P for demand and supply; no 'reading' of it. No numbers here (Sinan: they would give away C2b's poll). Demand: P = 750 − 50Q. find the equilibrium ◀ 1 / 5 ▶
curve 1 · P = 750 − 50Q
curve 2 · P = 150 + 50Q
what are Q* and P*?
answer
Q* = 6, P* = €450
1 · which is which? curve 1 falls: demand · curve 2 rises: supply
2 · in equilibrium both give the same Q and the same P, so the two right-hand sides are equal
3 · solve for Q*, then put Q* into both curves: the same P*
750 − 50Q = 150 + 50Q
600 = 100Q → Q* = 6
P* = 750 − 300 = 150 + 300 = €450 market · streaming subscriptions in Austria (P in € per month, Q in thousand subscribers)
demand · Qd = 300 − 10P
supply · Qs = 5P − 60
what are Q* and P*?
answer
Q* = 60, P* = €24
In equilibrium Qd = Qs: set the two right-hand sides equal.
Collect P on one side and divide by the SUM of the slopes (10 + 5); then Q* from either curve.
300 − 10P = 5P − 60
360 = 15P → P* = 24
Q* = 300 − 10·24 = 60 (check: 5·24 − 60 = 60) market · launches on reusable rockets (P in € million per launch, Q launches per year)
demand · P = 100 − 3Q
supply · P = 16 + Q
what are Q* and P*?
answer
Q* = 21, P* = €37 million
Both are already P(Q): set them equal and solve for Q*.
Put Q* into BOTH curves: they must give the same P*.
100 − 3Q = 16 + Q
84 = 4Q → Q* = 21
P* = 16 + 21 = 37 (check: 100 − 3·21 = 37) market · monthly memberships at Vienna climbing gyms (P in € per month, Q in hundred members)
demand · Qd = 192 − 4P
inverse supply · P = 12 + Q/2
what are Q* and P*?
answer
Q* = 48, P* = €36
Same form first: P = 12 + Q/2 → Qs = 2P − 24.
Then Qd = Qs, solve for P*, and Q* from either curve.
Qs = 2P − 24
192 − 4P = 2P − 24
216 = 6P → P* = 36, Q* = 48 market · personal-trainer sessions at Vienna gyms (P in € per session, Q in hundred sessions per week)
demand · Qd = 70 − 2P
inverse supply · P = 15 + Q/2
what is the equilibrium price?
answer
€25
Same form first: P = 15 + Q/2 → Qs = 2P − 30. Then Qd = Qs.
Qs = 2P − 30
70 − 2P = 2P − 30
100 = 4P → P* = 25, Q* = 20 Your comment: all the steps in the answer; ask someone to do it on the board. Wrong options: arithmetic slip · used the supply intercept twice · swapped P* and Q*. Please let Sinan check. shortage Shortage (excess demand): at a price below P*, buyers want more than sellers offer.
the story · the government caps the price at €350 (below P* = €450)
buyers want · 750 − 50Q = 350 → Qd = 8
miners mine · 150 + 50Q = 350 → Qs = 4
shortage · Qd − Qs = 8 − 4 = 4 · only 4 are sold (the short side)
demand P = 750 − 50Q · supply P = 150 + 50Q
Your comment: a story, the calculation from the two equations, and the graph showing the shortage. The graph step by step: the curves, the cap line at €350, the two points (Qs = 4 on supply, Qd = 8 on demand) with dashed lines down to 4 and 8, then the shortage bracket between them highlighted. Buyers outbid each other: without the cap the price would rise. surplus Surplus (excess supply): at a price above P*, sellers offer more than buyers want.
the story · the government sets a minimum price of €550 (above P* = €450)
buyers want · 750 − 50Q = 550 → Qd = 4
miners mine · 150 + 50Q = 550 → Qs = 8
surplus · Qs − Qd = 8 − 4 = 4 · only 4 are sold (the short side)
demand P = 750 − 50Q · supply P = 150 + 50Q
Same build as shortage: curves, the floor line at €550, the two points (Qd = 4, Qs = 8), the surplus bracket highlighted. Sellers would cut prices: without the floor the price would fall. (Not 'consumer surplus': that comes later.) summary demand / inverse demand
price → quantity wanted · quantity → price buyers would pay
supply / inverse supply
price → quantity offered · quantity → price sellers need
the price splits the gain
the total gain is the same at any price; the price decides who gets it
equilibrium
the same Q and P for demand and supply · the marginal buyer and seller pin down the price
shortage / surplus
price below / above P* · the short side is sold
before you go how well do you know it now? 1 · not at all … 5 · very well
demand
inverse demand
law of demand
supply
inverse supply
equilibrium
shortage and surplus
in your own words · 1/4 1 · what is inverse demand?
(English, 1–2 sentences, without looking at the slides)
2 · how well do you think you described inverse demand?
Own words + how well described → Jev after class (Cevdet). Concept id invdem. in your own words · 2/4 1 · what is inverse supply?
(English, 1–2 sentences, without looking at the slides)
2 · how well do you think you described inverse supply?
Own words + how well described → Jev after class (Cevdet). Concept id invsup. in your own words · 3/4 1 · what is equilibrium?
(English, 1–2 sentences, without looking at the slides)
2 · how well do you think you described equilibrium?
Own words + how well described → Jev after class (Cevdet). Concept id eq. in your own words · 4/4 1 · what is a shortage?
(English, 1–2 sentences, without looking at the slides)
2 · how well do you think you described a shortage?
Own words + how well described → Jev after class (Cevdet). Concept id ss. 
