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