jl-ch04.pptVIP

The Supply and Demand Chapter 4 Topics Demand and determinants Supply and determinants Equilibrium Markets Buyers determine demand. Market Type:  A Competitive Market A competitive market is a market. . . Competition: Perfect and Otherwise Products are the same Numerous buyers and sellers so that each has no influence over price Buyers and Sellers are price takers Monopoly One seller, and seller controls price Oligopoly Few sellers Not always aggressive competition 1. Demand Quantity demanded is the amount of a good that buyers are willing and able to purchase. Law of Demand The law of demand states that there is an inverse relationship between price and quantity demanded. Demand Schedule Demand Curve Demand Curve The demand curve is the downward-sloping line relating price to quantity demanded. Market Demand Market demand refers to the sum of all individual demands for a particular good or service. Change in Quantity Demanded versus Change in Demand Change in Quantity Demanded Movement along the demand curve. Caused by a change in the price of the product. Changes in Quantity Demanded Change in Quantity Demanded versus Change in Demand Change in Demand A shift in the demand curve, either to the left or right. Caused by a change in a determinant other than the price. Changes in Demand Determinants of Demand Market price Consumer income Prices of related goods Tastes Expectations Consumer Income As income increases the demand for a normal good will increase. As income increases the demand for an inferior good will decrease. Consumer IncomeNormal Good Consumer IncomeInferior Good Prices of Related GoodsSubstitutes Complements When a fall in the price of one good reduces the demand for another good, the two goods are called substitutes. When a fall in the price of one good increases the demand for another good, the two goods are called complements. Change in Quantity Demanded versus Change in Demand Explain how each of the following statement