Demand, Supply, and Market Equilibrium
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- Clemence Porter
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1 Chapter of of,, and - Chapter of of Chapter Objectives Defined and What Affects It. Defined and What Affects It. How and Together Determine. How Changes in and Affect rices and Quantities. and their Implications for Surpluses and Shortages. - Chapter of of Defined. is a schedule that shows the various amounts of a product that consumers are willing and able to buy at each specific price in a series of possible prices during a specified time period. Schedule. The schedule shows how much buyers are willing and able to purchase at five possible prices. -
2 Chapter of of Law of. Law of demand is a fundamental characteristic of demand behavior. Other things being equal, as price increases, the corresponding quantity demanded falls. Explanation of the law of demand. Diminishing Marginal Utility. Income Effect. Substitution Effect. - Chapter of of Curve. Illustrates the inverse relationship between price and quantity. The downward slope indicates lower quantity (horizontal axis) at higher price (vertical axis), higher quantity at lower price, reflecting the Law of.. demand curve is horizontal sum of individual demand curves. - Chapter of of $ Q d 8 rice (per bushel) D 7 8 Quantity ed (bushels per week) Q -
3 Chapter of of of Tastes. Number of Buyers. Income. Normal Goods. Inferior Goods. rice of Related Goods. Substitute Good. Complementary Good. Unrelated Goods. Consumer Expectations. -7 Chapter of of Can Increase or Decrease $ Q d 8 rice (per bushel) Decrease in Increase in D D D 8 8 Q Quantity ed (bushels per week) -8 Chapter of of Can Increase or Decrease $ Q d 8 rice (per bushel) An Increase in Means a Shift of the Line Decrease in A Movement Between Any Two oints on a Curve is Called a Change in Quantity ed D D D 8 8 Q Quantity ed (bushels per week) -9
4 Chapter of of Defined. is a schedule that shows amounts of a product a producer is willing and able to produce and sell at each specific price in a series of possible prices during a specified time period. Schedule. Schedule shows what quantities will be offered at various prices or what price will be required to induce various quantities to be offered. - Chapter of of Law of. roducers will produce and sell more of their product at a high price than at a low price. Restated: There is a direct relationship between price and quantity supplied. Explanation of the Law of. Revenue Implications. Marginal Cost. - Chapter of of Curve. It shows a direct relationship between price and quantity supplied in an upward sloping curve.. supply curve is horizontal sum of individual supply curves. -
5 Chapter of of $ Q s rice (per bushel) S 7 Quantity Supplied (bushels per week) Q - Chapter of of of Resource rices. Technology. Taxes and Subsidies. rices of Other Goods. roducer Expectations. Number of Sellers. - Chapter of of Can Increase or Decrease $ Q s rice (per bushel) S S 8 Quantity Supplied (bushels per week) S Q -
6 Chapter of of $ Q s Can Increase or Decrease A Movement Between Any Two oints on a Curve is Called a Change in Quantity Supplied rice (per bushel) S S 8 Quantity Supplied (bushels per week) S An Increase in Means a Shift of the Line Q - Chapter of of rice. Quantity. Surplus. Shortage. Rationing Function of rices. -7 Chapter of of Buyers $ Q d,, 7,,, rice (per bushel) Buyers & Sellers, Bushel Surplus 7, Bushel Shortage S $ rice Floor $ rice Ceiling D Sellers $ Q s,, 7,,, Bushels of Corn (thousands per week) -8
7 Chapter of of Changes in. Changes in. Changes in. Efficient Allocation. roductive Efficiency. Allocative Efficiency. -9 Chapter of of Increase; Decrease Decrease; Increase Increase; Increase Decrease; Decrease rice Quantity???? - Chapter of of rice Ceilings on Gasoline. Rationing roblem. Black s. Rent Controls. rice Floors on Wheat. Optimal Allocation of Resources. - 7
8 Chapter of of Key Terms age schedule schedule Law of demand Law of supply Diminishing marginal utility curve Income effect of supply Substitution effect Change in supply curve Change in quantity of demand supplied Normal goods price Inferior goods quantity Substitute good Surplus Complementary good Shortage Change in demand rice ceiling Change in quantity rice floor demanded - Chapter of of Next Chapter review The U.S. Economy: ublic and rivate Sectors Chapter - 8
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