turning in chapter 3 homework numbers 4, 8, 10, and 18 theory in action report
Post on 19-Dec-2015
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Turning in
• Chapter 3 homework Numbers 4, 8, 10, and 18
• Theory in Action report
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Chapter 4
Introduction to the Demand and Supply Framework
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Figure 4.1 The Individual Demand Curve for Coffee
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Market Demand
• Horizontal sum of quantities demanded over all people
• Horizontal??? Holding price constant
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Figure 4.2 Individual and Market Demand Schedules and Curves
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The Law of Demand
• There is a negative or inverse relationship between price and quantity demanded.
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Changes in Demand
• Consumers’ income Normal and inferior goods
• Prices of related goods Substitutes and complements
• Tastes and preferences
• Expectations about future prices
• The number of consumers in the market
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Changes in Demand (cont’d)
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SELF TEST-Do we understand??SELF TEST-Do we understand??
• Substitutes Coke vs. Pepsi --- what happens if the price
of Coke increases? Qd of Pepsi?• NOTHING
Qd of Coke?• DECREASES
Demand for Coke?• NOTHING
Demand for Pepsi?• INCREASES
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• Compliments Tennis Balls and Tennis Rackets --- what
happens if the price of Tennis Rackets increase?
Qd of Tennis Balls?• NOTHING
Qd of Tennis Rackets?• DECREASES
Demand for Tennis Balls?• DECREASES
Demand for Tennis Rackets?• NOTHING
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Life Lessons
• If you know that the primary “hiring season” is in the spring when should you buy a suit??? Shopping off-season can mean
lower prices.
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A Decrease in Demand in the Suit Market
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Supply
• The quantity of a good or service that producers are willing and able to produce or offer for sale at a given set of prices over a given period of time.