Chapter04_H - 1 6E:001 Principles of Economics Spring, 2008...

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Unformatted text preview: 1 6E:001 Principles of Economics Spring, 2008 Chapter 4 Demand and Supply Ch. 4 2 Contents { The Invisible Hand { Demand and Quantity Demanded { Supply and Quantity Supplied { Supply and Demand Equilibrium { Effects of Demand Shifts on Supply- Demand Equilibrium Ch. 4 3 Contents (continued) { Supply Shifts and Supply-Demand Equilibrium { Fighting the Invisible Hand: The Market Fights Back { A Simple but Powerful Lesson 2 Ch. 4 4 The Invisible Hand { Supply and demand automatic solution to economic problems { Interference in markets counterproductive consequences { Invisible hand in the pursuit of self-interest, individuals promote social well-being Ch. 4 5 Demand and Quantity Demanded { Buyers demand { Quantity of demand = the amount that buyers wish to purchase at each price { Law of demand = price and the quantity of demand are negatively related, all else equal Ch. 4 6 Demand and Quantity Demanded { The Demand Schedule z Table showing the quantity of demand at each price for some good 3 Ch. 4 7 { The Demand Curve z Graph of a demand schedule z Negative slope Demand and Quantity Demanded Ch. 4 8 FIGURE 1 Demand Curve for Milk Price per Quart H G F E C D D B A Quantity Demanded in Billions of Quarts per Year 75 70 65 60 55 50 45 0 .90 1.00 1.10 1.20 1.30 1.40 $1.50 Ch. 4 9 Demand and Quantity Demanded { Shifts of the Demand Curve z Movement along a demand curve due to { Price...
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Chapter04_H - 1 6E:001 Principles of Economics Spring, 2008...

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