Econ 201 - The market forces of supply and demand (CH 4)

effects of shifts on equilibrium when: Increase in Demand, Increase in Supply

P ?, Q ↑

effects of shifts on equilibrium when: Decrease in Demand, Decrease in Supply

P ?, Q ↓

effects of shifts on equilibrium when: No Change in Demand, No Change in Supply

P and Q unchanged

effects of shifts on equilibrium when: Increase in Demand, Decrease in Supply

P ↑, Q ?

effects of shifts on equilibrium when: Increase in Demand, No Change in Supply

P ↑, Q ↑

effects of shifts on equilibrium when: No Change in Demand, Decrease in Supply

P ↑, Q ↓

effects of shifts on equilibrium when: Decrease in Demand, Increase in Supply

P ↓, Q ?

effects of shifts on equilibrium when: No Change in Demand, Increase in Supply

P ↓, Q ↑

effects of shifts on equilibrium when: Decrease in Demand, No Change in Supply

P ↓, Q ↓

Factors That Determine Demand

* Price of a related good (complement or subsitute) *Income of consumers *Tastes of consumers *Number of consumers *expectations of consumers

Law of Supply

The claim that, other things being equal, the quantity supplied of a good increases when the price of that good rises

Law of Demand

The claim that, with other things being equal, the quantity demanded of a good falls when the price of that good rises

shortage

when there is excess demand because price for a commodity are below the equilibrium price

surplus

when there is excess supply because prices for a commodity are above the equilibrium price

Supply Schedule

A table showing the relationship between the price of a good and the amount of it that sellers are willing and able to supply at various prices

Demand Schedule

A table showing the relationship between the price of a good and the amount that buyers are willing and able to purchase at various prices

Determinants of Supply

*Price Inputs *Production technology *Number of producers *expectations of producers

Demand Curve

A graphical object showing the relationship between the price of a good and the amount of the good that buyers are willing and able to purchase at various prices

Supply Curve

A graphical object showing the relationship between the price of a good and the amount that sellers are willing and able to supply at various prices

Quantity demanded

The amount of a good that buyers are willing and able to purchase at a given price

Quantity Supplied

The amount of a good that sellers are willing and able to supply at a given price

market demand curve

adding up the quantity demanded by each individual in the market

market supply curve

adding up the quantity supplied by each individual in the market

What causes a shift in the demand curve

if a change occurs in any of that factors that determine demand