Markets
- 1. 3 - 1 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show Individual Markets Demand & Supply 3C H A P T E R
- 2. 3 - 2 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show MARKETS DEFINED MARKETS POTENTIAL SELLERS POTENTIAL BUYERS
- 3. 3 - 3 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show $5 4 3 2 1 DEMAND DEFINED DEMAND SCHEDULE Various Amounts A Series of Possible Prices a specified time period other things being equal P QD 10 20 35 55 80
- 4. 3 - 4 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show LAW OF DEMAND As Price Falls Quantity Demanded Rises As Price Rises Quantity Demanded Falls An inverse relationship exists between price and quantity demanded
- 5. 3 - 5 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show Diminishing Marginal Utility LAW OF DEMAND
- 6. 3 - 6 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show Diminishing Marginal Utility LAW OF DEMAND Income Effect
- 7. 3 - 7 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show Diminishing Marginal Utility LAW OF DEMAND Income Effect Substitution Effect
- 8. 3 - 8 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show Diminishing Marginal Utility Income Effect Substitution Effect LAW OF DEMAND Demand Curve Individual and Market Demand
- 9. 3 - 9 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show DETERMINANTS OF DEMAND Tastes and Preferences Number of Buyers Incomes Normal (Superior) & Inferior Goods Prices of Related Goods Substitutes & Complements Unrelated Goods Expectations
- 10. 3 - 10 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show GRAPHING DEMAND P Qo $5 4 3 2 1 P QD $5 4 3 2 1 10 20 35 55 80 Price of Corn Quantity of Corn CORN Plot the Points 10 20 30 40 50 60 70 80
- 11. 3 - 11 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show 55 P Qo $5 4 3 2 1 P QD $5 4 3 2 1 10 20 35 55 80 Price of Corn Quantity of Corn CORN Plot the Points 10 20 30 40 50 60 70 80 GRAPHING DEMAND
- 12. 3 - 12 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show 35 P Qo $5 4 3 2 1 P QD $5 4 3 2 1 10 20 35 55 80 Price of Corn Quantity of Corn CORN Plot the Points 10 20 30 40 50 60 70 80 GRAPHING DEMAND
- 13. 3 - 13 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show P Qo $5 4 3 2 1 P QD $5 4 3 2 1 10 20 35 55 80 Price of Corn Quantity of Corn CORN Plot the Points 10 20 30 40 50 60 70 80 GRAPHING DEMAND
- 14. 3 - 14 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show P Qo $5 4 3 2 1 P QD $5 4 3 2 1 10 20 35 55 80 Price of Corn Quantity of Corn CORN Plot the Points 10 20 30 40 50 60 70 80 GRAPHING DEMAND
- 15. 3 - 15 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show P Qo $5 4 3 2 1 P QD $5 4 3 2 1 10 20 35 55 80 D Price of Corn Quantity of Corn CORN Connect the Points 10 20 30 40 50 60 70 80 GRAPHING DEMAND
- 16. 3 - 16 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show P Qo $5 4 3 2 1 P QD $5 4 3 2 1 10 20 35 55 80 D Price of Corn Quantity of Corn CORN 10 20 30 40 50 60 70 80 What if Demand Increases? GRAPHING DEMAND
- 17. 3 - 17 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show P Qo $5 4 3 2 1 P QD $5 4 3 2 1 D Price of Corn Quantity of Corn CORN 10 20 30 40 50 60 70 80 D Increase in Demand Increase in Quantity Demanded10 20 35 55 80 30 40 60 80 + GRAPHING DEMAND
- 18. 3 - 18 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show P Qo $5 4 3 2 1 P QD $5 4 3 2 1 10 20 35 55 80 D Price of Corn Quantity of Corn CORN 10 20 30 40 50 60 70 80 What if Demand Decreases? GRAPHING DEMAND
- 19. 3 - 19 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show P Qo $5 4 3 2 1 P QD $5 4 3 2 1 10 20 35 55 80 D Price of Corn Quantity of Corn CORN 10 20 30 40 50 60 70 80 -- 10 20 40 60 D Decrease in Demand Decrease in Quantity Demanded GRAPHING DEMAND
- 20. 3 - 20 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show SUPPLY DEFINED SUPPLY SCHEDULE $1 2 3 4 5 P QS CORN Various Amounts 5 20 35 50 60
- 21. 3 - 21 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show SUPPLY DEFINED SUPPLY SCHEDULE $1 2 3 4 5 P QS CORN Various Amounts A Series of Possible Prices a specified time period other things being equal 5 20 35 50 60
- 22. 3 - 22 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show LAW OF SUPPLY As Price Rises Quantity Supplied Rises As Price Falls Quantity Supplied Falls A direct relationship exists between price and quantity supplied
- 23. 3 - 23 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show DETERMINANTS OF SUPPLY Resource Prices Technology Taxes & Subsidies Prices of Other Goods Price Expectations Number of Sellers
- 24. 3 - 24 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show 5 P Qo $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 P QS Price of Corn Quantity of Corn CORN Plot the Points GRAPHING SUPPLY
- 25. 3 - 25 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show P Qo $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 P QS Price of Corn Quantity of Corn CORN Plot the Points GRAPHING SUPPLY
- 26. 3 - 26 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show 35 P Qo $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 P QS Price of Corn Quantity of Corn CORN Plot the Points GRAPHING SUPPLY
- 27. 3 - 27 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show P Qo $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 P QS Price of Corn Quantity of Corn CORN Plot the Points GRAPHING SUPPLY
- 28. 3 - 28 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show P Qo $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 P QS Price of Corn Quantity of Corn CORN Plot the Points GRAPHING SUPPLY
- 29. 3 - 29 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show S P Qo $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 P QS Price of Corn Quantity of Corn CORN Plot the Points Connect the Points GRAPHING SUPPLY
- 30. 3 - 30 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show S P Qo $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 P QS Price of Corn Quantity of Corn CORN What if Supply Increases? GRAPHING SUPPLY
- 31. 3 - 31 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show S P Qo $5 4 3 2 1 10 20 30 40 50 60 70 80 Price of Corn Quantity of Corn $5 4 3 2 1 60 50 35 20 5 P QS CORN 80 70 60 45 30 SIncrease in Supply Increase in Quantity Supplied GRAPHING SUPPLY
- 32. 3 - 32 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show S P Qo $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 P QS Price of Corn Quantity of Corn CORN What if Supply Decreases? GRAPHING SUPPLY
- 33. 3 - 33 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show S P Qo $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 P QS Price of Corn Quantity of Corn CORN S 45 30 20 0 -- Decrease in Supply Decrease in Quantity Supplied GRAPHING SUPPLY
- 34. 3 - 34 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show S P Qo $5 4 3 2 1 10 20 30 40 50 60 70 80 $5 4 3 2 1 60 50 35 20 5 P QS Price of Corn Quantity of Corn CORN Combining with Demand GRAPHING SUPPLY
- 35. 3 - 35 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show MARKET DEMAND & SUPPLY $5 4 3 2 1 10 20 35 55 80 $5 4 3 2 1 60 50 35 20 5 x 200 B U Y E R S P QD BUSHELS OF CORN MARKET DEMAND 2,000 4,000 7,000 11,000 16,000 x 200 S E L L E R S 12,000 10,000 7,000 4,000 1,000 P QS BUSHELS OF CORN MARKET SUPPLY EQUILIBRIUM Graphically
- 36. 3 - 36 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show 7 S P Qo $5 4 3 2 1 2 4 6 8 10 12 14 16 P QD $5 4 3 2 1 2,000 4,000 7,000 11,000 16,000 $5 4 3 2 1 12,000 10,000 7,000 4,000 1,000 D P QS Price of Corn Quantity of Corn CORN MARKET CORN MARKET Market Clearing Equilibrium MARKET DEMAND & SUPPLY
- 37. 3 - 37 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show 7 S P Qo $5 4 3 2 1 2 4 6 8 10 12 14 16 P QD $5 4 3 2 1 2,000 4,000 7,000 11,000 16,000 $5 4 3 2 1 12,000 10,000 7,000 4,000 1,000 D P QS Price of Corn Quantity of Corn CORN MARKET CORN MARKETSurplus At a $4 price more is being supplied than demanded MARKET DEMAND & SUPPLY
- 38. 3 - 38 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show 117 S P Qo $5 4 3 2 1 2 4 6 8 10 12 14 16 P QD $5 4 3 2 1 2,000 4,000 7,000 11,000 16,000 $5 4 3 2 1 12,000 10,000 7,000 4,000 1,000 D P QS Price of Corn Quantity of Corn CORN MARKET CORN MARKET At a $2 price more is being demanded than supplied Shortage MARKET DEMAND & SUPPLY
- 39. 3 - 39 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show MARKET EQUILIBRIUM Equilibrium Price & Quantity Rationing Function of Prices Changes in Demand Changes in Quantity Demanded Changes in Supply Changes in Quantity Supplied
- 40. 3 - 40 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show MARKET EQUILIBRIUM Equilibrium Price & Quantity Rationing Function of Prices Changes in Demand Changes in Quantity Demanded Changes in Supply Changes in Quantity Supplied Complex Cases Multiple Shifts
- 41. 3 - 41 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show Equilibrium Price & Quantity Rationing Function of Prices Changes in Demand Changes in Quantity Demanded Changes in Supply Changes in Quantity Supplied Chapter Conclusion MARKET EQUILIBRIUM
- 42. Key Terms market demand demand schedule law of demand diminishing marginal utility income effect substitution effect demand curve determinants of demand normal goods inferior goods substitute good complementary good change in demand change in quantity demanded supply supply schedule law of supply supply curve determinants of supply change in supply change in quantity supplied surplus shortage equilibrium price equilibrium quantity rationing function of prices Copyright McGraw-Hill/Irwin, 2002 BACK END
- 43. 3 - 43 Copyright McGraw-Hill/Irwin, 2002 Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous 際際滷 Next 際際滷 End Show Next: Chapter 4