lecture2 - Definitions Market Demand Curve Chapter 2 A...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Copyright © 2000 by Linda Wong 1 Chapter 2 Demand and Supply Definitions • Market: – Any group of people and firms organized for and engaged in buying and selling some good or service. Definitions Market Demand Schedule: – A table that indicated the quantity of some good demanded across a market for various possible prices Definitions Market Demand Curve: – A graphical representation of a market demand schedule. Slope of Demand Curves • The Quantity Demanded of most goods and services generally falls as its price increases. It follows that Demand Curves for most goods and services are generally downward sloping. Example - The Demand for Oil Price per Barrel (dollars) Q u a n t i t y D e m a n d e d (millions of barrels per year) 1 2 730 1 3 710 1 4 700 1 5 690 1 6 680 1 7 670 1 8 665
Image of page 1

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

View Full Document Right Arrow Icon
Copyright © 2000 by Linda Wong 2 Price per barrel (dollars) 15 10 Market demand curve 600 700 800 Quantity demanded (millions of barrels per year) 0 Figure 2.1 MARKET DEMAND CURVE FOR OIL, 1999 Copyright © 2000 by W.W. Norton & Company Figure 2.1 The Determinants of Demand for Any Good or Service These determinants include: Time Period Consumers’ Tastes Consumers’ Incomes The Prices of Other Goods The Determinants of Demand for Any Good or Service The position and shape of the demand curve are similarly dependent on these same factors. It follows that changes in any of these can shift the demand curve. Changes That Can Shift the Demand Curve In L o w e r q u a n t i t i e s d e m a n d e d f o r a l l p r i c e s T h e g o o d b e c o m e s l e s s d e s i r a b l e t o c o n s u m e r s C o n s u m e r s ’ i n c o m e s d e c l i n e The prices of substitute goods fall Copyright © 2000 by W.W. Norton & Company Figure 2.2 EFFECT OF PUBLIC EMPHASIS ON ENERGY CONSERVATION ON MARKET DEMAND CURVE FOR OIL Price Quantity demanded Figure 2.2 Changes that can Shift the Demand Curve Out H i g h e r q u a n t i t i e s d e m a n d e d f o r a l l p r i c e s T h e g o o d b e c o m e s m o r e a t t r a c t i v e t o c o n s u m e r s . The price of substitute goods increase.
Image of page 2