lecture2 - supply and demand - handout

lecture2 - supply and demand - handout - 1/13/2009 Topic 2:...

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1/13/2009 1 Topic 2: Supply and Demand (1) USC Marshal 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 Marshal • Price of the good • Price of other goods • Income •Tas tes • Government regulations,… 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 Marshal – Mathematically, we can summarize this relationship by writing Q x d D p x , I , p y ,...
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1/13/2009 2 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. USC Marshal Then, Q bread = 13. – Let P bread = $4, I =$10 and P butter = $4. Then, Q bread = 13. – And so on… Demand functions and curves • Much more efficient to represent the relationship mathematically. In this case, the demand function is • What about graphically? Q bread d 15 1 2 P bread 1 10 I 1 4 P butter USC Marshal – Drawing in three dimensions is hard – Drawing in four dimensions is impossible • What is the primary relationship? Demand functions and curves Demand curve: – A relationship between the quantity demanded and the price of the product, holding other things constant ( ceteris paribus ) – The demand function was USC Marshal – Suppose that I = 20 and P butter = 4. The demand curve is then? – Suppose that I = 10 and P butter = 8. The demand curve is then?
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This note was uploaded on 04/21/2009 for the course BUAD 351 taught by Professor Eastin during the Spring '07 term at USC.

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lecture2 - supply and demand - handout - 1/13/2009 Topic 2:...

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