individual markets: demand & supply 3 c h a p t e r
TRANSCRIPT
![Page 1: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/1.jpg)
Individual Markets:
• Demand & Supply
3C H A P T E R
![Page 2: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/2.jpg)
MARKETS DEFINED
MARKETS
POTENTIALSELLERS
POTENTIALBUYERS
![Page 3: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/3.jpg)
$54321
DEMAND DEFINED
DEMAND SCHEDULEDEMAND SCHEDULE
Various AmountsVarious Amounts
A Series of Possible PricesA Series of Possible Prices
…a specified time period…other things being equal
P QD
1020355580
![Page 4: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/4.jpg)
LAW OF DEMAND
• As Price Falls…
…Quantity Demanded Rises
• As Price Rises…
…Quantity Demanded Falls
An inverse relationship exists between price and quantity demanded
![Page 5: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/5.jpg)
• Diminishing Marginal Utility
• Income Effect
• Substitution Effect
LAW OF DEMAND
• Demand Curve
• Individual and Market Demand
![Page 6: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/6.jpg)
GRAPHING DEMANDP
Qo
$5
4
3
2
1
P QD
$54321
1020355580
Price of Corn
Quantity of Corn
CORN Plot the Points
10 20 30 40 50 60 70 80
![Page 7: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/7.jpg)
P
Qo
$5
4
3
2
1
P QD
$54321
1020355580
Price of Corn
Quantity of Corn
CORN Plot the Points
10 20 30 40 50 60 70 80
GRAPHING DEMAND
![Page 8: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/8.jpg)
P
Qo
$5
4
3
2
1
P QD
$54321
1020355580
D
Price of Corn
Quantity of Corn
CORN
10 20 30 40 50 60 70 80
What if
Demand
Increases?
GRAPHING DEMAND
![Page 9: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/9.jpg)
P
Qo
$5
4
3
2
1
P QD
$54321
D
Price of Corn
Quantity of Corn
CORN
10 20 30 40 50 60 70 80
D’
Increase
in
Demand
Increase
in Quantity
Demanded1020355580
30406080 +
GRAPHING DEMAND
![Page 10: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/10.jpg)
P
Qo
$5
4
3
2
1
P QD
$54321
1020355580
D
Price of Corn
Quantity of Corn
CORN
10 20 30 40 50 60 70 80
What if
Demand
Decreases?
GRAPHING DEMAND
![Page 11: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/11.jpg)
P
Qo
$5
4
3
2
1
P QD
$54321
1020355580
D
Price of Corn
Quantity of Corn
CORN
10 20 30 40 50 60 70 80
-- 10204060
D’
Decrease
in
Demand
Decrease
in Quantity
Demanded
GRAPHING DEMAND
![Page 12: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/12.jpg)
DETERMINANTS OF DEMAND
• Tastes• Number of Buyers• Income
– Normal (Superior) & Inferior Goods
• Prices of Related Goods– Substitutes & Complements– Unrelated Goods
• Expectations
![Page 13: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/13.jpg)
SUPPLY DEFINED
SUPPLY SCHEDULESUPPLY SCHEDULE
$12345
P QS
CORN
Various AmountsVarious Amounts
A Series of Possible PricesA Series of Possible Prices
…a specified time period…other things being equal
520355060
![Page 14: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/14.jpg)
LAW OF SUPPLY
• As Price Rises…
…Quantity Supplied Rises
• As Price Falls…
…Quantity Supplied Falls
A direct relationship exists between price and quantity supplied
![Page 15: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/15.jpg)
P
Qo
$5
4
3
2
1
10 20 30 40 50 60 70 80
$54321
60503520 5
P QS
Price of Corn
Quantity of Corn
CORN
Plot the PointsGRAPHING SUPPLY
![Page 16: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/16.jpg)
SP
Qo
$5
4
3
2
1
10 20 30 40 50 60 70 80
$54321
60503520 5
P QS
Price of Corn
Quantity of Corn
CORN
What if
Supply
Increases?
GRAPHING SUPPLY
![Page 17: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/17.jpg)
SP
Qo
$5
4
3
2
1
10 20 30 40 50 60 70 80
Price of Corn
Quantity of Corn
$54321
60503520 5
P QS
CORN
8070604530
S’Increase
in
Supply
Increase
in Quantity
Supplied
GRAPHING SUPPLY
![Page 18: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/18.jpg)
SP
Qo
$5
4
3
2
1
10 20 30 40 50 60 70 80
$54321
60503520 5
P QS
Price of Corn
Quantity of Corn
CORN
What if
Supply
Decreases?
GRAPHING SUPPLY
![Page 19: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/19.jpg)
SP
Qo
$5
4
3
2
1
10 20 30 40 50 60 70 80
$54321
60503520 5
P QS
Price of Corn
Quantity of Corn
CORN
S’
453020 0 --
Decrease
in
Supply
Decrease
in Quantity
Supplied
GRAPHING SUPPLY
![Page 20: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/20.jpg)
DETERMINANTS OF SUPPLY
• Resource Prices
• Technology
• Taxes & Subsidies
• Prices of Other Goods
• Price Expectations
• Number of Sellers
![Page 21: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/21.jpg)
DETERMINANTS OF SUPPLY
• Resource Prices
• Technology
• Taxes & Subsidies
• Prices of Other Goods
• Price Expectations
• Number of Sellers
Combining
with
Demand
![Page 22: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/22.jpg)
MARKET DEMAND & SUPPLY
$54321
1020355580
$54321
60503520 5
200
B
U
Y
E
R
S
P QD
BUSHELS
OF CORNMARKET
DEMAND
2,0004,0007,000
11,00016,000
200
S
E
L
L
E
R
S
12,00010,000
7,0004,0001,000
P QS
BUSHELS
OF CORNMARKET
SUPPLY
EQUILIBRIUMGraphically…
x x
![Page 23: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/23.jpg)
7
SP
Qo
$5
4
3
2
1
2 4 6 8 10 12 14 16
P QD
$54321
2,0004,0007,000
11,00016,000
$54321
12,00010,000
7,0004,0001,000
D
P QS
Price of Corn
Quantity of Corn
CORN
MARKET
CORN
MARKET
Market Clearing Equilibrium
MARKET DEMAND & SUPPLY
![Page 24: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/24.jpg)
7
SP
Qo
$5
4
3
2
1
2 4 6 8 10 12 14 16
P QD
$54321
2,0004,0007,000
11,00016,000
$54321
12,00010,000
7,0004,0001,000
D
P QS
Price of Corn
Quantity of Corn
CORN
MARKET
CORN
MARKETSurplusAt a $4 price
more is being
supplied than
demanded
MARKET DEMAND & SUPPLY
![Page 25: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/25.jpg)
117
SP
Qo
$5
4
3
2
1
2 4 6 8 10 12 14 16
P QD
$54321
2,0004,0007,000
11,00016,000
$54321
12,00010,000
7,0004,0001,000
D
P QS
Price of Corn
Quantity of Corn
CORN
MARKET
CORN
MARKET
At a $2 price
more is being
demanded than
supplied
Shortage
MARKET DEMAND & SUPPLY
![Page 26: Individual Markets: Demand & Supply 3 C H A P T E R](https://reader036.vdocument.in/reader036/viewer/2022081519/56649e0e5503460f94af8354/html5/thumbnails/26.jpg)
117
SP
Qo
$5
4
3
2
1
2 4 6 8 10 12 14 16
P QD
$54321
2,0004,0007,000
11,00016,000
$54321
12,00010,000
7,0004,0001,000
D
P QS
Price of Corn
Quantity of Corn
CORN
MARKET
CORN
MARKET
Shortage
MARKET DEMAND & SUPPLY Surplus