Supply and Demand Review

Supply and Demand Review - Supply and Demand (Review)...

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Unformatted text preview: Supply and Demand (Review) (Review) Economics of Markets Economics A market is a mechanism through market which buyers and sellers communicated to trade goods and services. services. – Two markets impact a firm Market for the product Market for labor (labor market) – Supply and demand exists for both Review of Market Demand Review Demand – Schedule showing amounts of goods or Schedule services a buyer is willing and able to willing purchase at each possible price at a given time time Review of Market Demand Review Demand curve Price $ D2 D1 Quantity Demanded Review of Market Demand Review Market demand curve – Price and quantity demanded are inversely or Price negatively related negatively – For a particular demand curve, only a change in For quantity demanded or price results in movement along the demand curve (Movement along D1) along – Changes in demand result in a shift of the demand Changes curve (Shifting from D1 to D2) curve Review of Market Demand Review A demand curve can go to the right demand (increase) or go to the left (decrease) (increase) – Demand shifters Demand Consumer tastes Number of buyers Consumer income Prices of related goods (substitutes and Prices complements) complements) Expected future prices Review of Market Supply Review Supply – Schedule showing the amounts of a good Schedule or service that a firm is willing and able to willing sell at each price during a given period sell Review of Market Supply Review Supply curve S1 S2 Price $ Quantity Supplied Review of Market Supply Review Market supply curve – Price and quantity supplied are positively or Price directly related – For a particular supply curve, only a change in For quantity supplied or price results in movement along the supply curve (Movement along S1) along – Changes in supply result in a shift to the Changes demand curve (Shifting from S1 to S2) demand Review of Market Supply Review A supply curve shifts outward to the right supply or backward to the left or – Supply shifters Supply Resource prices (including wages) Technology Prices of other goods (substitutes and Prices complements) complements) Expected future prices Taxes and subsidies – direct regulation Number of suppliers Market Equilibrium Market Equilibrium occurs when the price of a Equilibrium product adjusts so that the quantity that consumers will purchase at that price is identical to the quantity that suppliers will sell (buyers’ intention=sellers’ intentions) sell On the graph, equilibrium is the point On where supply and demand intersect where Market Equilibrium Market ...
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This note was uploaded on 04/11/2011 for the course WCOB 2033 taught by Professor A during the Spring '07 term at Arkansas.

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