MICRO_SG_9e_chap_3

MICRO_SG_9e_chap_3 - 3 Demand, Supply, and Market...

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3 Demand, Supply, and Market Equilibrium C hapter objectives: 1. Define and apply quantity demanded and quantity supplied, and state the law of demand and the law of supply. 2. Draw and interpret demand and supply graphs. 3. Identify the determinants of demand and supply and indicate how each must change for demand and supply to increase or decrease. 4. Derive market demand and market supply curves from individual demand and supply schedules. 5. Differentiate between a shift of a demand curve or supply curve and a movement along a curve, and depict these cases correctly on a graph. 6. Provide explanations for the slope of a typical demand curve. 7. Distinguish the relationship that exists between two goods that are substitutes and the relationship that exists between two goods that are complements. 8. Distinguish between a good that is normal and a good that is inferior. 9. Determine equilibrium price and quantity and detail the process by which the market moves from one equilibrium situation to another when demand or supply shifts. 10. Define excess demand (shortage) and excess supply (surplus) and predict their effects on the existing price level. The single best piece of advice, particularly for this essential chapter, is “practice, practice, practice.” A second piece of advice must be “draw, draw, draw.” Don’t be put off by the graphs—develop a solid intuitive feel for demand and supply by talking your way through how the market should behave. In most of the multiple-choice questions in this chapter, the
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MICRO_SG_9e_chap_3 - 3 Demand, Supply, and Market...

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