Macro Notes.pdf - lSupply and Demandu200b u25cf Demand...

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lSupply and Demand : Demand Schedule is used to see the demand for a certain product at different product This is what a Demand Schedule looks like: P Qa Qb Qc Q Market $5 4 2 4 10 $4 7 5 8 20 $3 12 10 13 35 $2 19 17 19 55 $1 27 25 28 80 Law of Demand: There is an inverse relationship between the price of a product and the quantity demanded assuming all other things remaining the same.
Determinants of Demand: Tastes and Preferences Income Price of Related Goods Expectations of Future Price and Income Number of Buyers How to Change in Quantity Demanded/Change in Demand: Pay close attention to all parts The amount that the consumers are going to buy is going to change. Why? Change in Quantity Demanded: Moving from one point on a demand schedule or curve to another point on the came curve or schedule The only thing that can cause a change in the quantity demanded is a change in the price of that product. Change in Demand:
Moves the entire demand curve on the model The Five Determinants of Demand cause Changes in Demand!!!!!!! Favorable change in tastes and preferences cause an increase in demand Consumer Expectations of future price: An expectation of an increase in price will cause increase in demand An expectation of an decrease will cause a decrease in demand An expectation of higher income cause an increase in demand An Expectation of lower income causes a decrease in demand Supply: A list that shows the amount that the sellers are willing and able to make available for sale at each price Determinants of Supply: Price of Alternative Products Causes a Decrease in the supply of the other products
The price of one product decreases and it causes an increase in the supply of an alternate product Expectations of sellers about the future price of the product Sells who expect a higher price in the future will cause a decrease in supply now Sellers who expect lower prices in the future will cause an increase in supply now Number of sellers will either increase or decrease the amount of supply Supply and Demand: Surplus= The quantity supplied is greater than the quantity demanded at a specific price
Ch 5 Time Series Graph: Time goes on the x axis and the output on the y Goes up and down Business Cycles Ups and downs changes in the overall level of economic activity Four Different stages of the business cycle: Peak (the top of the graph) When the output is at its highest point of this cycle Income is high Employment is high Unemployment is low Prices are rising Contraction (when the graph is going down) Output is declining Income is declining or not growing as fast Employment is declining Unemployment is rising Prices tend not to be declining or not rising as fast Trough (the lowest point on the line)
Output is at its lowest point Income is at its lowest point Unemployment is at its highest level

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