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    Chapter Three Abbreviated

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    Mya Ballin
    The document summarizes key concepts in microeconomics including demand, supply, and market equilibrium. It defines demand as a curve showing the quantity of a product desired at different prices over time. The law of demand states that price and quantity demanded are inversely related. Supply is defined as a curve showing the quantity of a product supplied at different prices over time. The law of supply states that price and quantity supplied are directly related. Market equilibrium occurs where the demand and supply curves intersect and the quantity demanded equals the quantity supplied. Changes in demand or supply can shift the curves and impact equilibrium price and quantity.

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    Chapter Three Abbreviated

    Uploaded by

    Mya Ballin
    62 views1 page
    The document summarizes key concepts in microeconomics including demand, supply, and market equilibrium. It defines demand as a curve showing the quantity of a product desired at different prices over time. The law of demand states that price and quantity demanded are inversely related. Supply is defined as a curve showing the quantity of a product supplied at different prices over time. The law of supply states that price and quantity supplied are directly related. Market equilibrium occurs where the demand and supply curves intersect and the quantity demanded equals the quantity supplied. Changes in demand or supply can shift the curves and impact equilibrium price and quantity.

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    The document summarizes key concepts in microeconomics including demand, supply, and market equilibrium. It defines demand as a curve showing the quantity of a product desired at different prices over time. The law of demand states that price and quantity demanded are inversely related. Supply is defined as a curve showing the quantity of a product supplied at different prices over time. The law of supply states that price and quantity supplied are directly related. Market equilibrium occurs where the demand and supply curves intersect and the quantity demanded equals the quantity supplied. Changes in demand or supply can shift the curves and impact equilibrium price and quantity.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    62 views1 page

    Chapter Three Abbreviated

    Uploaded by

    Mya Ballin
    The document summarizes key concepts in microeconomics including demand, supply, and market equilibrium. It defines demand as a curve showing the quantity of a product desired at different prices over time. The law of demand states that price and quantity demanded are inversely related. Supply is defined as a curve showing the quantity of a product supplied at different prices over time. The law of supply states that price and quantity supplied are directly related. Market equilibrium occurs where the demand and supply curves intersect and the quantity demanded equals the quantity supplied. Changes in demand or supply can shift the curves and impact equilibrium price and quantity.

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    I. Demand is a schedule or curve that shows various amounts of a product that are desired at a series of possible prices during a specied period of time. A. The law of demand states that there is an inverse relationship between price and demand. 1. This law works because of three main reasons: a. Diminishing marginal utility: decrease in the marginal utility as quantity rises. b. Income eect: A buyers purchasing power varies with the price of an item. c. Substitution eect: Buyers nd incentive in substituting products to ensure greatest utility. B. Things that will change a demand curve are called the determinants of demand. 1. There are 5 main determinants (A handy way I remember them is PINE Tree): a. Price of related goods i. Substitute goods ii. Complimentary goods iii. Independent goods iv. Gien goods b. Income i. Superior or normal goods ii. Inferior Goods c. Number of buyers in a market d. Expectations e. Tastes 2. Changes in quantity demanded is simply movement from one point to another on the curve. II. Supply is a schedule or curve that shows various amounts of a product for sale at a series of possible prices during a specied period of time. A. The law of suply states that there is a direct relationship between price and demand. 1. Reasons why: a. The supplier is on the receiving end of the products price. Higher price = greater incentive. b. Beyond some quantity of production, marginal costs increase. B. Things that will change a supply curve are called the determinants of supply. 1. There are 5 main determinants (A handy way I remember them is PaRENT): a. Price of other goods (substitution in production) b. Resource prices c. Expectations d. Number of sellers e. Technology 2. Changes in quantity supplied is simply movement from one point to another on the curve. III. Supply, demand, and market equilibrium. A. Surplus: Excess of supply. Caused by price oors. B. Shortage: Lack of supply. Caused by price ceilings. C. Changes in demand means direct correlation with eq. price and quantity. D. Changes in supply means inverse correlation with eq. price and direct correlation with eq. quantity. E. Varying changes in supply and demand i. The same change in both will see a denite change in quantity. ii. The opposite change in the two will see a denite change in price. IV. Consumer and producers surplus. A. Occurs when one of the sides derives greater value than originally indicated on the demand or supply schedules.

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