101chapter2 - Chapter 2: Demand & Supply Demand Supply...

Info iconThis preview shows pages 1–21. Sign up to view the full content.

View Full Document Right Arrow Icon
Demand Supply Market Equilibrium Examples Price ceiling/floor
Background image of page 1

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

View Full DocumentRight Arrow Icon
Build a model buyers sellers & their interaction
Background image of page 2
Use the model to predict the impact of changes to explain changes that occur
Background image of page 3

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

View Full DocumentRight Arrow Icon
Demand behavior of buyers relationship between quantity demanded of a good price holding other factors constant
Background image of page 4
quantity demanded (Qd) amount of good or service unit of measure per unit of time “2 bottles of water per day”
Background image of page 5

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

View Full DocumentRight Arrow Icon
Law of Demand If the price of a good then the Qd holding other things constant!!!
Background image of page 6
Why? higher price makes you feel poorer income effect higher price on one good, substitute other goods. substitution effect
Background image of page 7

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

View Full DocumentRight Arrow Icon
Example: bottles of water per day Describe demand in 2 ways: Demand schedule a list of Qd at each price Demand curve a graph of demand schedule
Background image of page 8
Demand Schedule P Qd Price = $/bottle Qd = bottles/day $2.00 0 $1.50 1 $1.00 2 $.50 3
Background image of page 9

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

View Full DocumentRight Arrow Icon
Demand curve P Qd 0 1 2 3 4 2 1.5 1 .5 D
Background image of page 10
individual demand demand curve for 1 buyer market demand** demand curve for all buyers add up individual Qd for each price
Background image of page 11

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

View Full DocumentRight Arrow Icon
Changes in Demand recall our assumption hold other things constant allow only price to change but what if other factors do change? change in demand shift to a new demand curve
Background image of page 12
increase in demand increase in Qd at every price demand curve shifts to the right
Background image of page 13

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

View Full DocumentRight Arrow Icon
P Qd 0 1 2 3 4 2 1.5 1 .5 D D’
Background image of page 14
decrease in demand decrease in Qd at every price demand curve shifts to the left
Background image of page 15

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

View Full DocumentRight Arrow Icon
P Qd D D’’
Background image of page 16
Factors affecting demand income prices of related goods buyer expectations # of buyers preferences
Background image of page 17

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

View Full DocumentRight Arrow Icon
income for normal goods , an increase in income will increase demand examples: CDs, bottled water, eating out,
Background image of page 18
for inferior goods , an increase in income will decrease the demand examples: ramen noodles, check-cashing service
Background image of page 19

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

View Full DocumentRight Arrow Icon
what are related goods? substitutes
Background image of page 20
Image of page 21
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 89

101chapter2 - Chapter 2: Demand & Supply Demand Supply...

This preview shows document pages 1 - 21. Sign up to view the full document.

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