单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,*,The Market Forces of Supply and Demand,Markets,A,market,is a group of buyers and sellers of a particular good or service.,The terms supply and demand refer to the behavior of people.as they interact with one another in,markets,.,And Economics,especially Microeconomics is about how,supply and demand interact in markets.,Market Types or Structures,Competitive Markets,Products are the same,price takers,Monopoly,Monopolistic Competition,Oligopoly,Demand Curve,$3.00,2.50,2.00,1.50,1.00,0.50,2,1,3,4,5,6,7,8,9,10,12,11,Price of Ice-Cream Cone,Quantity of Ice-Cream Cones,0,Why does the Demand Curve Slope Downward?,Law of Demand,Inverse relationship between price and quantity.,Law of Diminishing Marginal Utility.,Utility is the extra satisfaction that one receives from consuming a product.,Marginal means extra.,Diminishing means decreasing.,Market Demand,Market demand,refers to the sum of all individual demands for a particular good or service.,Graphically,individual demand curves are summed,horizontally,to obtain the market demand curve.,Ceteris Paribus,Ceteris paribus is a Latin phrase that means all variables other than the ones being studied are assumed to be constant.Literally,ceteris paribus means“other things being equal.,The demand curve slopes downward because,ceteris paribus,lower prices imply a greater quantity demanded!,Two Simple Rules for Movements vs.Shifts,Rule One,When an independent variable changes and that variable does not appear on the graph,the curve on the graph will shift.,Rule Two,When an independent variable does appear on the graph,the curve on the graph will not shift,instead a movement along the existing curve will occur.,Lets apply these rules to the following cases of supply and demand!,Change in Quantity Demanded versus Change in Demand,Change in,Quantity Demanded,Movement along the demand curve.,Caused by a change in the,price,of the product.,Changes in Quantity Demanded,0,D,1,Price of Cigarettes per Pack,Number of Cigarettes Smoked per Day,A tax that raises the price of cigarettes results in a movement along the demand curve.,A,C,20,2.00,$4.00,12,Change in Quantity Demanded versus Change in Demand,Change in,Demand,A shift in the demand curve,either to the left or right.,Caused by a change in a determinant other than the price.,Determinants of Demand,Market price,Consumer income,Prices of related goods,Tastes,Expectations,What are some examples?,Consumer Income,Normal Good,$3.00,2.50,2.00,1.50,1.00,0.50,2,1,3,4,5,6,7,8,9,10,12,11,Price of Ice-Cream Cone,Quantity of Ice-Cream Cones,0,Increase,in demand,An increase in income.,D,1,D,2,Consumer Income,Inferior Good,$3.00,2.50,2.00,1.50,1.00,0.50,2,1,3,4,5,6,7,8,9,10,12,11,Price of Ice-Cream Cone,Quantity of Ice-Cream Cones,0,Decrease,in demand,An increase in income.,D,1,D,2,Prices of Related Goods,Substitutes&Complements,When a fall in the price of one good reduces,the demand for another good,the two goods are called,substitutes,.,When a fall in the price of one good increases,the demand for another good,the two goods are called,complements,.,Change in Quantity Demanded versus Change in Demand,Variables that Affect Quantity Demanded,A Change in,This Variable.,Price,Represents a movement,along the demand curve,Income,Shifts the demand curve,Prices of related,goods,Shifts the demand curve,Tastes,Shifts the demand curve,Expectations,Shifts the demand curve,Number of,buyers,Shifts the demand curve,Supply Curve,$3.00,2.50,2.00,1.50,1.00,0.50,2,1,3,4,5,6,7,8,9,10,12,11,Price of Ice-Cream Cone,Quantity of Ice-Cream Cones,0,Law of Supply,The,law of supply,states that there is a,direct(positive)relationship,between price and quantity,supplied.,Supply,Quantity supplied,is the amount of a good that sellers are,willing and able,to sell.,Change in Quantity Supplied,1,5,Price of Ice-Cream Cone,Quantity of Ice-Cream Cones,0,S,1.00,A,C,$3.00,A rise in the price of ice cream cones results in a,movement along the supply curve,.,Market Supply,Market supply,refers to the sum of all individual supplies for all sellers of a particular good or service.,Graphically,individual supply curves are summed,horizontally,to obtain the market supply curve.,Determinants of Supply,Market price,Input prices,Technology,Expectations,Number of producers,What are some examples?,Change in Supply,Price of Ice-Cream Cone,Quantity of Ice-Cream Cones,0,S,1,S,2,S,3,Increase in Supply,Decrease in Supply,Change in Quantity Supplied versus Change in Supply,Supply,Demand,Price of Ice-Cream Cone,Quantity of Ice-Cream Cones,Equilibrium of Supply and Demand,2,1,3,4,5,6,7,8,9,10,12,11,0,$3.00,2.50,2.00,1.50,1.00,0.50,Equilibrium,Price of Ice-Cream Cone,Quantity of Ice-Cream Cones,2,1,3,4,5,6,7,8,9,10,12,11,0,$3.00,2.50,2.00,1.50,1.00,0.50,Supply,Demand,Surplus,Excess Supply,Excess Demand,Quantity of,Ice-Cream Cones,Price of,Ice-Cream,Cone,$2.00,0,1,2,3,4,5,6,7,8,9,10,11,12,13,Supply,Demand,$1.50,Shortage,Three Steps To Analyzing Changes in Equili