Demand and Elasticity

Demand and Elasticity - DemandandElasticity MANEC387...

Info iconThis preview shows pages 1–12. Sign up to view the full content.

View Full Document Right Arrow Icon
 David Benson ©  Demand and Elasticity MANEC 387 Economics of Strategy David F. Benson
Background image of page 1

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

View Full DocumentRight Arrow Icon
 David Benson ©  Exercise I will name possible prices for a mini-Snickers As I name a price, please tell me how many  Snickers you are willing to purchase at that  price, right now. This exercise is an offer to sell and it is real. I  reserve the right to call in the cash from any  individual at any time who indicates their  willingness to buy (you can bring me the cash 
Background image of page 2
 David Benson ©  Class Demand For Reese’s Quantity Demanded Price
Background image of page 3

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

View Full DocumentRight Arrow Icon
 David Benson ©  Market Demand Curve Shows the amount of a good that will be  purchased at alternative prices. Law of Demand   The demand curve is downward sloping. Quantity D Price
Background image of page 4
 David Benson ©  Determinants of Demand Income Prices of substitutes  Prices of complements Advertising Population changes Consumer expectations
Background image of page 5

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

View Full DocumentRight Arrow Icon
 David Benson ©  The Demand Function An equation representing the demand  curve Qxd = f(Px , PY , M, H,) Qxd  = quantity demand of good  X Px  = price of good X. PY  = price of a substitute good  Y . M  = income.
Background image of page 6
 David Benson ©  Change in Quantity Demanded Price Quantity D0 A to  B :    Increase in  quantity  demanded 4 $1 0 A 7 $ 6 B
Background image of page 7

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

View Full DocumentRight Arrow Icon
 David Benson ©  What could lead to a change in  Only a change in price Why?   Because a given demand curve simply reflects  preferences under a given set of conditions—it is a  picture of stationary preferences When conditions change, preferences often do as  well, so that the entire relationship of quantity to 
Background image of page 8
 David Benson ©  Price Quantity D0 Change in Demand 6 7 13 D 1 D0 to  D1 :  Increase in  Demand
Background image of page 9

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

View Full DocumentRight Arrow Icon
 David Benson ©  What could lead to an increase in  A change in any of the determinants of  demand: Income Prices of substitutes  Prices of complements Advertising Population changes Consumer expectations
Background image of page 10
 David Benson ©  Changing Prices of Rival  Substitute goods  – an  increase  in the price of  good X leads to an  increase  in the  consumption of good Y (and  vice versa ).
Background image of page 11

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

View Full DocumentRight Arrow Icon
Image of page 12
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/20/2011 for the course MANEC 437 taught by Professor Benson during the Winter '11 term at BYU.

Page1 / 36

Demand and Elasticity - DemandandElasticity MANEC387...

This preview shows document pages 1 - 12. Sign up to view the full document.

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