This preview shows page 1. Sign up to view the full content.
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
– 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
– 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
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 ...
View Full Document
This note was uploaded on 04/11/2011 for the course WCOB 2033 taught by Professor A during the Spring '07 term at Arkansas.
- Spring '07