201-lecture-05-supply-demand

201-lecture-05-supply-demand - Supply and Demand Our...

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Econ 201 - Principles of Microeconomics 1 Supply and Demand Supply and Demand “Teach a parrot the terms supply and demand and you’ve got an economist.” ~ Thomas Carlyle Our discussion: Our discussion: 1. Demand determinants and changes in demand 2. Supply determinants and changes in supply 3. Interaction between markets 4. Price controls 5. Black markets 1. Demand 1. Demand -Determinants Determinants ± Determinants of demand include: – Income (or wealth), tastes, age, quality, advertising, season, the legality of consuming the good, the cost of maintaining the good in working order, our health, the price of other goods… ± Does a change in one of these determinants change demand or just the quantity demanded ? – A change in any determinant other than the good’s own price has the potential to influence demand… the whole relationship between prices and quantities demanded. P D 1 Q z How does an increase in projected snowfall effect the demand for snowboards? (i.e. a change in tastes) D 2 P D 1 Q z How does a change in law allowing the medical use of marijuana effect the demand for marijuana? D 2 P D 1 Q z How does a decrease in what we expect gasoline prices to be next week effect the demand for gasoline today? D 2
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Econ 201 - Principles of Microeconomics 2 P S D 1 P A Q A Q z How does an increase in what you expect a firm’s stock price to be tomorrow effect the
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201-lecture-05-supply-demand - Supply and Demand Our...

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