LECTURE 3 - SUPPLY & DEMAND

LECTURE 3 - SUPPLY & DEMAND - Supply & Demand 3...

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Supply & Demand
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3 Laws Law of Demand Law of Supply Law of Product Equilibrium What do we mean by “LAW”? “Widely held proposition”
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Law of Demand As Price As Price Only under CETERIS PARIBUS All things held constant, all things equal… Quantity Demanded Quantity Demanded
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Law of Supply As Price As Price Only under CETERIS PARIBUS All things held constant, all things equal… Quantity Supplied Quantity Supplied
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Think about terminology… Law of Demand What is relationship between Price and Qty D? Inverse, Negative, Indirect Price change under ceteris paribus equals Change in QUANTITY DEMANDED Not Change in DEMAND
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Think about terminology again… Law of Supply What is relationship between Price and Qty S? Positive, Direct Price change under ceteris paribus equals Change in QUANTITY SUPPLIED Not Change in SUPPLY
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Law of Demand Demand Schedule PRICE QTY D $4 1 3 2 2 3 1 4
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Demand Curve 0 1 2 3 4 5 0 1 2 3 4 5 D PRICE QUANTITY LABEL YOUR GRAPHS !!!
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Demand Curve 0 1 2 3 4 5 0 1 2 3 4 5 D PRICE QUANTITY - Represents a Willingness to Buy - Does not tell us Market Price
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LECTURE 3 - SUPPLY & DEMAND - Supply & Demand 3...

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