lecture2 - Supply and Demand

lecture2 - Supply and Demand - Topic 2: Supply and Demand...

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opic 2: Supply and Demand (1) Topic 2: Supply and Demand (1) USC Marshall
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Supply and demand • Review the basic supply and demand framework – Demand – Supply – Market equilibrium USC Marshall
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Demand functions and curves A demand function: – A relationship between the quantity demanded (per time period by a given set of individuals) and other variables USC Marshall
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Demand functions and curves A demand function: – A relationship between the quantity demanded (per time period by a given set of individuals) and other variables • Demand for coffee in Los Angeles per day • Demand for new cars in the US per year •… USC Marshall
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Demand functions and curves A demand function: – A relationship between the quantity demanded (per time period by a given set of individuals) and other variables – Other variables? USC Marshall
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Demand functions and curves A demand function: – A relationship between the quantity demanded (per time period by a given set of individuals) and other variables – Other variables? • Price of the good • Price of other goods • Income • Tastes • Government regulations,… USC Marshall
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Demand functions and curves A demand function: – A relationship between the quantity demanded (per time period by a given set of individuals) and other variables – Mathematically, we can summarize this relationship y writing by writing Q x d D p x , I , p ,... y USC Marshall
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Demand functions and curves Examples of demand levels: – When the price of bread is $3, the income of consumers is $10 and the price of butter is $2, the quantity of bread demanded is 14. USC Marshall
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Demand functions and curves Examples of demand levels: – When the price of bread is $3, the income of consumers is $10 and the price of butter is $2, the quantity of bread demanded is 14. – Let P bread = $6, I =$15 and P butter = $2. Then, Q bread = 13. USC Marshall
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Demand functions and curves Examples of demand levels: – When the price of bread is $3, the income of consumers is $10 and the price of butter is $2, the quantity of bread demanded is 14. – Let P bread = $6, I =$15 and P butter = $2. Then, Q bread = 13. – Let P bread = $4, I =$10 and P butter = $4. Then, Q bread = 13. USC Marshall
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Demand functions and curves Examples of demand levels: – When the price of bread is $3, the income of consumers is $10 and the price of butter is $2, the quantity of bread demanded is 14. – Let P bread = $6, I =$15 and P butter = $2. Then, Q bread = 13. – Let P bread = $4, I =$10 and P butter = $4. Then, Q bread = 13. – And so on… USC Marshall
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Demand functions and curves • Much more efficient to represent the relationship mathematically. In this case, the demand function is Q bread d 15 1 2 P bread 1 10 I 1 4 P butter USC Marshall
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Demand functions and curves • Much more efficient to represent the relationship mathematically. In this case, the demand function is Q bread d 15 1 2 P bread 1 10 I 1 4 P butter • What about graphically?
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lecture2 - Supply and Demand - Topic 2: Supply and Demand...

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