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BYU-I - ECON 150 - ECON 150 Demand Supply and Price - Class Notes

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BYU-I - ECON 150 - ECON 150 Demand Supply and Price - Class Notes

School: Brigham Young University - Idaho
Department: Economics
Course: ECON Principles & Problems Micro
Professor: Rick Hirschi
Term: Spring 2016
Tags: Econ, Microeconomic, price, demand, supply, equilibrium pricing, market, and Money
Name: ECON 150 Demand Supply and Price
Description: There are some shortened material from week 3 of ECON 150, including Demand, Law of Demand, Demand Curve, Determinants of Demand, Supply, Law of Supply, Determinants of Supply, Price Ceiling, Price Floor, Price Equilibrium and so on..
Uploaded: 01/17/2018
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background image Demand, Price and Supply Demand Law Supply Law Difference between  Demand and 
Quantity Demanded
Difference between 
Supply and Quantity 
Supplied Determinants of 
Demand
The inverse relationship between price and quantity demanded (as price falls, the quantity demanded rises, as price rises, the quantity demanded falls). 
Because price represents Y axis and quantity represents X axis, that why 
demand curve will be downward sloping.
Law of supply it’s when there positive or direct relationship prevails between  price and quantity supplied (as price rises, the quantity of supplied ruses; as 
prices falls, the quantity supplied falls). 
Because quantity supplied lies on X axis and Price on Y, and by law of supply  they have a direct relationship, that why supply curve is upward sloping.   Demand is a schedule or a curve that shows the various amounts of a product
that consumers are willing and able to purchase at each o a series of possible
prices during a specified period of time. 
Quantity demanded ­ the number of product that may be purchased at various
possible prices, other things equal.
Supply is a schedule or curve showing the various amounts of a product that 
producers are willing and able to make available for sale at each of a series 
of possible prices during a specific period. 
Quantity supplied ­ the amount of corn that will be supplied at various prices,
other things equal.
1. Consumer tastes (preferences).  More product is desirable = more demand. 2. The number of buyers in the market.  More buyers = more demand. 3. Consumers income. 
     Higher income = higher demand.
4. The prices of related goods. 
Lower price of related goods = lower demand. 5. Consumer expectations. Less expectations = more demand In case of any of these determinants change, the demand curve will shift 
to the right of left. That why determinants of demand are sometime 
referred as “demand shifters”. 
Page revision/notes.  Demand and Supply Law, difference between Demand/Supply and Quantity  Demande/Supplied 
background image Demand, Price and Supply Determinants of 
Supply
Concept of 
equilibrium price 
and quantity Rationing function of  prices Price ceiling Price floor Productive and 
allocative efficiency
Shortage Surplus 1. Resource prices. Higher prices = lower supply. 2. Technology. Improvements of technologies helps to produce things cheaper. 3. Taxes and subsidies. Increase of property taxes = decrease in supply. More subsidies = 
more supply.
4. Prices of other goods. Higher prices = higher supply. 5. Producer expectations. Higher expectations = higher supply. 6. Number of sellers in the market. A change in any one or more of these determinants of supply, or 
supply shifters, will move the supply curve for a product either right 
or left. Shift right – increase in supply. Shift left – decrease in supply.
The equilibrium price is the price where the intentions of buyers and 
sellers perfectly match (quantity demanded equals quantity supplied). 
Equilibrium quantity is the quantity at which the intentions of buyers and 
sellers match, so that the quantity demanded and the quantity supplied are
equal.
The rationing function of prices is the ability if the competitive forces of 
supply and demand to establish a price at which selling and buying 
decisions are consistent.
A price ceiling sets the maximum legal price a seller may charge for a 
product or service. That why people can buy more, which means because 
of price ceiling, the demand increases. More demand leads to a more 
supply.
A price floor is a minimum price fixed by the government. 
A price floor allows government to restrict prices and that why the 
competition is exists. Higher prices lead to lower demands, so price floor 
are functioning in order to decrease demand.
Productive efficiency it’s when we deal with least­cost production (try to 
produce as much as possible.
Allocative efficiency produces the right amount of the product relative to 
other products.
Situation in which the demand for a product or service exceeds 
its supply in a market.
Situation in which the quantity of a good or service supplied is more than 
the quantity demanded, and the price is above the equilibrium level 
determined by supply and demand. That is, the quantity of the product 
that producers wish to sell exceeds the quantity that potential buyers are 
willing to buy at the prevailing price.

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School: Brigham Young University - Idaho
Department: Economics
Course: ECON Principles & Problems Micro
Professor: Rick Hirschi
Term: Spring 2016
Tags: Econ, Microeconomic, price, demand, supply, equilibrium pricing, market, and Money
Name: ECON 150 Demand Supply and Price
Description: There are some shortened material from week 3 of ECON 150, including Demand, Law of Demand, Demand Curve, Determinants of Demand, Supply, Law of Supply, Determinants of Supply, Price Ceiling, Price Floor, Price Equilibrium and so on..
Uploaded: 01/17/2018
3 Pages 21 Views 16 Unlocks
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