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Lecture Essentials of economics (3/e): Chapter 3 - Brue, McConnell, Flynn
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Lecture Essentials of economics (3/e): Chapter 3 - Brue, McConnell, Flynn
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Chapter 3 - Demand, supply, and market equilibrium. This chapter provides an introduction to demand and supply concepts. Both demand and supply are defined and illustrated; determinants of demand and supply are listed and explained. | Chapter 3 Demand, Supply, and Market Equilibrium Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin This chapter provides an introduction to demand and supply concepts. Both demand and supply are defined and illustrated; determinants of demand and supply are listed and explained. The concept of equilibrium and the effects of changes in demand and supply on equilibrium price and quantity are explained and illustrated. The chapter also includes brief discussions of efficiency (productive and allocative) and price controls (floors and ceilings). Markets Interaction between buyers and sellers Markets may be: Local National International Price is discovered in the interactions of buyers and sellers LO1 3- In this chapter the focus is on markets that are competitive. This requires large numbers of buyers and sellers acting independently. Local markets include such markets as the farmer’s market that brings together buyers and sellers of produce in the summer. National markets include markets like the U.S. real estate market and international markets like the New York Stock Exchange. Demand Schedule or curve Amount consumers are willing and able to purchase at a given price Other things equal Individual demand Market demand LO1 3- To be part of the demand for a good, consumers have to be willing and able to purchase the good. When creating demand, we are assuming that the only factor that causes consumers to buy more or less is the price of the good. It is assumed that all other factors that influence the amount that consumers will buy are constant. Market demand is created by summing the individuals’ demand curves. Law of Demand Other things equal, as price falls, the quantity demanded rises, and as price rises, the quantity demanded falls. Reasons: Common sense Law of diminishing marginal utility Income effect and substitution effects LO1 3- An inverse relationship exists between price and quantity . | Chapter 3 Demand, Supply, and Market Equilibrium Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin This chapter provides an introduction to demand and supply concepts. Both demand and supply are defined and illustrated; determinants of demand and supply are listed and explained. The concept of equilibrium and the effects of changes in demand and supply on equilibrium price and quantity are explained and illustrated. The chapter also includes brief discussions of efficiency (productive and allocative) and price controls (floors and ceilings). Markets Interaction between buyers and sellers Markets may be: Local National International Price is discovered in the interactions of buyers and sellers LO1 3- In this chapter the focus is on markets that are competitive. This requires large numbers of buyers and sellers acting independently. Local markets include such markets as the farmer’s market that brings together buyers and sellers of .
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