chapter 4: the market forces of supply and demand 1
TRANSCRIPT
Chapter 4: The Market Forces of Supply and Demand
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Chapter 4: The Market Forces of Supply and Demand
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DEMANDTABLE 1 (text, page 71)Variables That Influence Buyers
A.) Movement along the demand curve
• Price of the Good Itself
Chapter 4: The Market Forces of Supply and Demand
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DEMANDTABLE 1 (text, page 71)Variables That Influence Buyers
A.) Movement along the demand curve
• Price of the Good Itself
B.) "Shifts" the demand curve
• Income• Prices of Related Goods• Tastes• Expectations• Number of Buyers
Demand
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DEMANDTABLE 1 (text, page 71)Variables That Influence Buyers
A.) Movement along the demand curve
• Price of the Good Itself
B.) "Shifts" the demand curve
• Income• Prices of Related Goods• Tastes• Expectations• Number of Buyers
D2
D1
D3
Price
Quantity
Increase in demand
Decrease in demand
Fig. 3 (p. 70)
Demand: How to Decrease Smoking? (Fig. 4, page 72) “Warnings” versus “Taxes”
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DEMANDTABLE 1 (text, page 71)Variables That Influence Buyers
A.) Movement along the demand curve
• Price of the Good Itself
B.) "Shifts" the demand curve
• Income• Prices of Related Goods• Tastes• Expectations• Number of Buyers
D1
D2
Decrease in demand
Fig. 4.a. (p. 72)
A “warnings on the package” policy tries to discourage smoking by shifting the demand curve to the left.
Price of Cigarettes per Pack
Number of Cigarettes Smoked per Day
Demand: How to Decrease Smoking? (Fig. 4, page 72) “Warnings” versus “Taxes”
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DEMANDTABLE 1 (text, page 71)Variables That Influence Buyers
A.) Movement along the demand curve
• Price of the Good Itself
B.) "Shifts" the demand curve
• Income• Prices of Related Goods• Tastes• Expectations• Number of Buyers
D1
Price of Cigarettes per Pack
Number of Cigarettes Smoked per Day
Decrease in demand
Fig. 4.b. (p. 72)
A “tax” on cigarettes tries to discourage smoking by movement left along the demand curve.
Supply
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SUPPLYTABLE 2 (text, page 76)Variables That Influence Sellers
A.) Movement along the supply curve
• Price of the Good Itself
B.) "Shifts" the supply curve
• Input prices• Technology• Expectations• Number of Sellers
S2
S1
Price
Quantity
Increase in supply
Decrease in supply
Fig. 7 (p. 75)S3
Chapter 4: The Market Forces of Supply and Demand
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DEMANDTABLE 1 (text, page 71)Variables That Influence Buyers
A.) Movement along the demand curve
• Price of the Good Itself
B.) "Shifts" the demand curve
• Income• Prices of Related Goods• Tastes• Expectations• Number of Buyers
SUPPLYTABLE 2 (text, page 76)Variables That Influence Sellers
A.) Movement along the supply curve
• Price of the Good Itself
B.) "Shifts" the supply curve
• Input prices• Technology• Expectations• Number of Sellers
Equilibrium
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Demand
Price
Quantity
Equilibrium
Fig. 8 (p. 77)
Supply
Equilibrium Quantity
Equilibrium Price
Markets NOT in Equilibrium (Figure 9, page 78)
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Demand
Price
Quantity
Fig. 9. a. Excess Supply
Supply
Quantity demanded
Surplus
Quantity supplied
Markets NOT in Equilibrium (Figure 9, page 78)
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Demand
Price
Quantity
Fig. 9. b. Excess Demand
Supply
Quantity supplied
Quantity demanded
Shortage
Fig. 10, page 80: New Equilibrium for an Upward Shift in Demand
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D1
Price
Quantity
New Equilibrium
Supply
New Equilibrium Quantity is Higher
New Equilibrium Price is Higher
D2
Increase in demand
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Demand
Price
Quantity
New Equilibrium
S1
New Equilibrium Quantity is Lower
New Equilibrium Price is Higher
Fig. 11, page 81: New Equilibrium for a Downward Shift in Supply
Decrease in supply
S2