Economics 101Chapter05

Economics 101Chapter05 - 1 Part II: The Tools of Analysis...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Part II: The Tools of Analysis Objectives for Chapter 5: Demand At the end of Chapter 5, you will be able to define the following terms : 1. Demand 2. Law of Demand 3. Demand Schedule 4. Demand Curve (and draw the curve) 6. Complement 7. Substitute 8. Shift in Demand 9. Movement Along the Demand Curve At the end of Chapter 5, you will also be able to explain 1. what changes would cause the demand curve to shift to the right 2. what changes would cause the demand curve to shift to the left 3. what change would cause a movement along the demand curve 1
Background image of page 1

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

View Full DocumentRight Arrow Icon
Chapter 5 Demand (latest revision May 2006) We have discussed aggregate production, the total production of all goods and services as measured by the Real Gross Domestic Product. As the course proceeds, we will want to know what makes aggregate production rise over time. We have also discussed the aggregate price level, the prices of all goods and services as measured by the GDP Deflator. As the course proceeds, we will also want to know what makes prices rise – that is, why there has been inflation. But in the beginning of our analysis, we will find it easier to focus on single products instead of aggregates. Studying aggregates can be complicated. So, in this chapter, we will begin to consider these questions: what determines the quantity produced of a single product and what determines the price of that single product . In other words, why were 17 million automobiles sold in a given year? Why not more or less? And why was the price of the average automobile approximately $20,000? Why not more or less? You will see later that, once we understand what determines the quantity produced and what determines the price of a single product such as automobiles, it is a short jump to understand what determines the quantities produced and the prices of all goods and services. So, what determines the quantity produced and what determines the price of a single product ? The answer to each of these questions is the same: the demand for the product and the supply of the product . In this chapter, we will focus on the demand for the product. In the next chapter, we will consider the supply of the product. Then we will put the demand and the supply together and determine how they answer the two questions. Let us begin with demand. The demand for a product is the quantity of that product that buyers desire to buy at each possible price . So for example, we might buy 17 million automobiles, 2 million new homes, 70 million baseball tickets, and so on. What factors explain the quantity demanded of a given product by buyers? 1. The Law of Demand Test Your Understanding Assume that you are planning to attend Palomar College next semester. This is your demand for college credits. Determine how many units you would take if the fee per unit is as given. FEE PER UNIT
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This document was uploaded on 05/08/2011.

Page1 / 9

Economics 101Chapter05 - 1 Part II: The Tools of Analysis...

This preview shows document pages 1 - 3. Sign up to view the full document.

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