ch 2 Supply and Demand - Econ 203 chapter 2 page 1 Chapter...

Info icon This preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 203 chapter 2 page 1 Chapter 2: Supply and Demand Application: The implications of taxation (tax incidence) Market equilibrium, excess demand, and excess supply The law of demand and the law of supply Organization Context: Perfectly competitive markets consumers and firms are price takers But essentially builds on results of Chapters 4 and 11! Review of basic concepts Econ 103 This chapter: Overview
Image of page 1

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

View Full Document Right Arrow Icon
Econ 203 chapter 2 page 2 Market • The buyers and sellers of a good or service • Practice: difficult to define where market begins or ends “The market demand function expresses the relationship between the total quantity demanded and the price of the product per unit of time, other things remaining the same.” Prices along the demand function represent the maximum amounts buyers will pay.
Image of page 2
Econ 203 chapter 2 page 3 Movement Along A Demand Function: 5 2 0 10 23 Quantity per day Generally, total quantity demanded increases when the price of the good decreases. This can be illustrated graphically as a movement along the demand function. Q d =D(P) A B Price
Image of page 3

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

View Full Document Right Arrow Icon
Econ 203 chapter 2 page 4 A movement along a demand function always involves a change in the price of the good and a change in the total quantity demanded of that good. This relationship between price and the quantity demanded is called the Law of Demand. The increase in the quantity demanded is due to increased consumption by current consumers and new consumers . The law of demand: “The empirical observation that when the price of a product falls, people demand larger quantities of it.”
Image of page 4
Econ 203 chapter 2 page 5 FIGURE 2-1 The Demand Curve for Lobsters in Shediac, N.B., July 20, 2020 The demand curve tells the quantities buyers will wish to purchase at various prices. Its key property is its downward slope; when price falls, the quantity demanded increases. This property is called the law of demand. The Law of demand and the law of supply
Image of page 5

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

View Full Document Right Arrow Icon
Econ 203 chapter 2 page 6 The above example happens to be linear , but demand curves are usually non-linear.
Image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern