02_demand and supply analysis.pptVIP

Competitive Markets Defined Market Demand Market Supply Market Equilibrium Characterizing Demand and Supply: Elasticity Example: Qd = 100 - 2P Convention! Economists always draw the quantity on the X-axis (endogenous variable) and the price on the Y-axis (exogenous variable) Therefore, we often define the inverse demand curve: P = P(Qd) ? P = 50 - Qd/2 (draw!) Movement along the demand curve means a change in the own price of the good. If any other factor that affects the demand changes, the demand curve shifts … If the change increases the willingness of consumers to acquire