ch04lectureS

ch04lectureS - Demand and Supply CHAPTER4 CHAPTER CHECKLIST...

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1 Demand and Supply CHAPTER 4 C H A P T E R C H E C K L I S T When you have completed your study of this chapter, you will be able to 1 Distinguish between quantity demanded and demand, and explain what determines demand. 2 Distinguish between quantity supplied and supply, and explain what determines supply. 3 Explain how demand and supply determine price and quantity in a market, and explain the effects of changes in demand and supply.
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2 COMPETITIVE MARKETS A market is any arrangement that bring buyers and sellers together. A market might be a physical place or a group of buyers and sellers spread around the world who never meet. COMPETITIVE MARKETS In this chapter, we study a competitive market that has so many buyers and so many sellers that no individual buyer or seller can influence the price. 4.1 DEMAND Quantity demanded is the amount of a good, service, or resource that people are willing and able to buy during a specified period at a specified price. The quantity demanded is an amount per unit of time. For example, the amount per day or per month.
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3 4.1 DEMAND ± Law of Demand Other things remaining the same, If the price of the good rises, the quantity demanded of that good decreases. If the price of the good falls, the quantity demanded of that good increases. 4.1 DEMAND ± Demand Schedule and Demand Curve Demand is the relationship between the quantity demanded and the price of a good when all other influences on buying plans remain the same. Demand is a list of quantities at different prices and is illustrated by the demand curve. 4.1 DEMAND Demand schedule is a list of the quantities demanded at each different price when all the other influences on buying plans remain the same. Demand curve is a graph of the relationship between the quantity demanded of a good and its price when all other influences on buying plans remain the same.
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4 4.1 DEMAND 4.1 DEMAND ± Individual Demand and Market Demand Market demand is the sum of the demands of all the buyers in a market. The market demand curve is the horizontal sum of the demand curves of all buyers in the market. 4.1 DEMAND
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5 4.1 DEMAND ± Changes in Demand Change in demand is a change in the quantity that people plan to buy when any influence other than the price of the good changes. A change in demand means that there is a new demand schedule and a new demand curve. 4.1 DEMAND Figure 4.3 shows changes in demand. 1. When demand decreases, the demand curve shifts leftward from D 0 to D 1 . 2. When demand increases, the demand curve shifts rightward from D 0 to D 2 . 4.1 DEMAND The main influences on buying plans that change demand are Prices of related goods Income Expectations Number of buyers Preferences
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6 4.1 DEMAND Prices of Related Goods A substitute is a good that can be consumed in place of another good. For example, apples and oranges.
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This note was uploaded on 03/24/2009 for the course ECON 101 taught by Professor Balaban during the Spring '07 term at UNC.

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ch04lectureS - Demand and Supply CHAPTER4 CHAPTER CHECKLIST...

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