Chapter_3 - Chapter 3: Supply and Demand I. II. III. IV....

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 3: Supply and Demand I. Setting the stage II. Demand III. Supply IV. Equilibrium
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 3: The model of Supply and Demand The setting Competitive Market: There are many buyers and sellers of the same good or service No one individual or firm can impact price The assumptions Buyers do what makes them happy Sellers try to maximize profit
Background image of page 2
Modeling a market Part 1: the demand story. Part 2: the supply story. Part 3: the equilibrium story
Background image of page 3

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

View Full DocumentRight Arrow Icon
The Demand Curve Shows relationship between price and quantity demanded, ceteris paribus. Hold fixed: All other prices Income Tastes Expectations Law of Demand: Price and Quantity Demanded are negatively related
Background image of page 4
Quantity Demanded vs. Demand Quantity Demanded: a specific quantity associated with a specific price Change in price => movement along curve Demand: set of combinations of prices and quantities that buyers are willing and able to buy within some time period. Change in assumptions => shift of curve
Background image of page 5

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

View Full DocumentRight Arrow Icon
Demand Curve Shifts Price of Related Goods Substitutes/Complements Income Normal Goods/Inferior Goods Tastes (exogenous) Preference for/Against Expectations Of future prices/future income
Background image of page 6
Question 3.1 When the economy suffers a downturn, vacationers are more
Background image of page 7

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

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

This document was uploaded on 03/29/2012.

Page1 / 19

Chapter_3 - Chapter 3: Supply and Demand I. II. III. IV....

This preview shows document pages 1 - 8. Sign up to view the full document.

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