Econ 100A 2 Demand, Supply and Elasticities

Econ 100A 2 Demand, - 2 SUPPLY DEMAND AND ELASTICITIES Econ 100A Mortimer 1 The Basics of Supply and Demand What do we use demand and supply

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
SUPPLY, DEMAND AND ELASTICITIES 2 Econ 100A Mortimer 8/31/2009 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The Basics of Supply and Demand Understand and predict how economic conditions affect market price and production Evaluate the impact of government price controls, minimum wages, price supports, and production incentives Determine how taxes, subsidies, tariffs, and import quotas affect consumers and producers What do we use demand and supply analysis for? Econ 100A Mortimer 8/31/2009 2
Background image of page 2
The relationship between the price of a good and the quantity demanded, when all other factors that influence demand are held constant SUPPLY AND DEMAND Market Demand Curve A curve that shows the quantity of a good that consumers are willing to buy at different prices . Law of Demand Econ 100A Mortimer 8/31/2009 3 Demand influencing factors may include income, the weather, and the prices of other goods. Shifts in Demand P Q
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
SUPPLY AND DEMAND Shifts in Demand substitutes Two goods for which an increase in the price of one leads to an in the quantity demanded of the other. e.g., Coke and Pepsi, butter and margarine, PC and Mac complements Two goods for which an increase in the price of one leads to a in the quantity demanded of the other. e.g., peanut butter and jelly, HDTVs and HD cable/satellite broadcasting, milk and cereal Econ 100A Mortimer 8/31/2009 4
Background image of page 4
SUPPLY AND DEMAND Market Supply Curve A curve that shows the total quantity of goods that suppliers are willing to sell at different prices . Law of Supply Supply influencing factors include changes in production costs (e.g., wages, interest charges, and the costs of raw materials) and the number of firms. Econ 100A Mortimer 8/31/2009 5 Shifts in Supply The relationship between price and quantity supplied, when all other factors that influence supply are held fixed. P Q
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
THE MARKET MECHANISM Market Equilibrium equilibrium ( or market clearing) price Price that equates the quantity supplied to the quantity demanded. In free markets price tends to change until the market clears. surplus Situation in which the quantity supplied exceeds the quantity demanded. e.g., shortage Situation in which the quantity demanded exceeds the quantity supplied. e.g., Econ 100A Mortimer 8/31/2009 6 P Q
Background image of page 6
CHANGES IN MARKET EQUILIBRIUM Supply and demand curves shift over time as market conditions change. Changes in price and
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/07/2009 for the course ECON 100A taught by Professor Woroch during the Spring '08 term at University of California, Berkeley.

Page1 / 25

Econ 100A 2 Demand, - 2 SUPPLY DEMAND AND ELASTICITIES Econ 100A Mortimer 1 The Basics of Supply and Demand What do we use demand and supply

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online