Supply&Demand Slides

Supply&Demand Slides - Intermediate Microeconomic...

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Unformatted text preview: Intermediate Microeconomic Theory Supply and Demand Revisited DEMAND For individual, distinguish between Quantity demanded The amount of a good or service that a consumer is willing and able to purchase at a given price during a specified period of time, ceteris paribus. Demand schedule Table showing quantity demanded corresponding to different prices. Inverse demand curve Graph of the schedule data Demand equation Specifies the functional arguments of quantity demanded Demand Schedule - Example Qd/t P/unit 10 $1.00 8 $1.20 6 $1.40 4 $1.60 2 $1.80 Demand Curve Ex: linear Quantity/time P = slope*Q + vertical intercept = ( P/ Q)*Q + VI = -0.10*Q + 2 Demand Curve Ex: non-linear P/ unit Qd/ t $2.00 $1.67 2 $1.43 4 $1.25 6 $1.11 8 $1.00 10 Qd/t P = ((1/20)*Q + (1/2))-1 ln(P) = - ln ((1/20)*Q + (1/2)) Law of Demand As price increases, quantity demanded decreases, ceteris paribus. Implies a downward-sloping demand curve (negative slope) dQd/dP <0 (more appropriately, Qd/P <0) Market Demand Curve: Horizontal Summation of Individual Demands P/ unit Qd/ t $2.00 $1.80 20 $1.60 40 $1.40 60 $1.20 80 $1.00 100 Q D /t P = 2 0.01*Q D Example: ten identical individuals Demand Equation Q D = f(P|Ps, Pc, Y, U, E, Pop ) Ex: linear in own price, holding all else constant Q D = + 1 P ( 1 <0) Ex: linear in own price, prices of related goods, and...
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This note was uploaded on 12/03/2010 for the course ECON 1021 taught by Professor Lang during the Spring '10 term at UChicago.

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Supply&Demand Slides - Intermediate Microeconomic...

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