microeconomics ch 3 supply and demand
microeconomics ch 3 supply and demand ECON 211
Popular in Micro Economics
verified elite notetaker
Popular in Economcs
This 0 page Class Notes was uploaded by Addie Pearson on Wednesday February 17, 2016. The Class Notes belongs to ECON 211 at Clemson University taught by prof fiore in Winter 2016. Since its upload, it has received 18 views. For similar materials see Micro Economics in Economcs at Clemson University.
Reviews for microeconomics ch 3 supply and demand
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 02/17/16
Ch 3 SUPPLY AND DEMAND OVERVIEW We have outlined the economic model quotpeople make choices by comparing marginal costsquot We will now develop the main tools in micro analysis quotdemand and supplyquot 0 Demand on a good re ects marginal bene ts how much the good is valued 0 Supply for a good re ects marginal costs of providing the good DEMAND AND SUPPLY Both demand and supply are based on OPTOMIZING behavior by individual decision makers Put the 2 together we nd the equilibrium market price and quantify those results Because demand re ects marginal bene ts and supply re ects marginal cost the market price tells us both how much one more unit of the good is values ie at the margin and how much suppling one more unit would cost THIS IS WHAT MAEKS THE SYSTEM OF MARKET PRICES USEFUL NEXT FEW CLASSES 1 Demand 2 Supply 3 Put together market prices 4 Review factors that shift supply and demand DEMAND How much is a good valued o Depends on marginal bene ts the consuer gets from consuming the good 0 demand is the measure of this value We d like to measure how much happier people feel but we can t observe it We CAN observe people s willingness to pay time effort Measuring demand 0 Relationship between 2 variables 1 Price 2 Quantity 0 Demand is a set of prices and quantity s that indicate how many units would be purchasedquotdemandedquot at any given place expressed in TABLES GRAPHS EQUATIONS Graphs and demand curves are most commonly used in this class Ex demand of Cuban cigars 0 Measuring how much people value these Set price see how many bought at this price Raise price how many bought now Lower price and now Three ways of expressing Cuban cigar d e ma n d 1 A demand schedule Quantity Price Demanded 10 0 1 0 1 9 2 8 3 7 4 6 5 5 7 3 8 2 10 Quantity 9 1 7 10 0 3 An eqluatlon QD P 0 Demand is thus a list of quantities corresponding to speci c prices 0 Demand schedule demand curve equation is Qquantity10Pprice aways expressed as quantity demand being a function of price ie Q on the left side Quantity demanded the quantity that buyers are willing and able to buy at a given price Demand function that shows the quantity demanded at different prices Law of demand The relationship between price and quantity along a demand curves is ALWAYS NEGATIVE Why are higher prices associates with lower quantities demanded Why people buy less of good A what do they do instead Market demand vs Induvidual demand The market demand curve or schedule results from the summing of individual demand curves SUPPLY Supply and costs Rpoducers will onl be willing to supply a good if they can receive more than ther opportunity cost marginal cost Three ways of expressing Cuban cigar supply 1 A supply schedule price 2 A supply curve Quantity Supply m 532M 1 0 2 l 3 2 4 3 5 4 6 5 7 6 1 8 7 9 8 10 9 3 An equation ClS P 1 Quantity supplied vs supply Quantity supplied the quantity that sellers are willing and able to sell at a given price Supply a function that shows the quality supplied at different prices Why do supply curves slope upwards Why are higher prices necessary to get bigger quantities supplied
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'