chapter 2 demand and supply class excercise

chapter 2 demand and supply class excercise - Chapter 3 and...

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Chapter 3 and 4: Demand, Supply and Market Equilibrium In this chapter you will learn: 1. What demand is and what affects it. 2. What supply is and what affects it 3. How supply and demand together determine market equilibrium. 4. How changes in supply and demand affect equilibrium prices and quantities. 5. What government-set prices are and how they can cause product surpluses and shortages. What the following events have in common? The price of orange juice rises in supermarkets, when a cold nap hits Florida. The price of hotel rooms in the Caribbean plummets, when the weather turns warm in New England? A war breaks out in the Middle East, the price of gasoline rises. They all show the workings of supply and demand DEMAND Quantity demanded ( Qd ) of any good is the ___________________________________________________________________________________________________________ ___________________________________________________________________________________________________________ __ 1
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Law of Demand ___________________________________________________________________________________________________________ ___________________________________________________________________________________________________________ ___________________________________________________________________________________________________________ ___ Qd/ P must be ___________________ Graph of Demand curve d R e Q a bP cM dP e fP gN = + + + + ℑ + + b, c, d, e, f, & g are slope parameters that measure effect on Qd of changing one of the variables while holding the others constant Six variables that influence Qd Price of good or service (P) 2
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Non-price factors or demand shifters Incomes of consumers (M)(Normal good or Inferior good) Prices of related goods & services (PR)(Complements or substitutes) Tastes and patterns of Consumers (T) Expected future price of product (Pe) Number of consumers in market (N) Graph for Price of good or service Graph for Income of consumers 3
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Graph for Prices of related goods and services: Substitutes Graph for Prices of related goods and services: Complements 4
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5
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Graph for effect of Tastes, Expected Future Price and Number of Consumers Change in quantity demanded Occurs when price changes Movement along demand curve Graph 6
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chapter 2 demand and supply class excercise - Chapter 3 and...

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