《Economics from Miss Chen》Chp2.ppt

Chapter 2: Markets Chapter 2: Markets 2.1 INTRODUCTION 2.2 DEMAND 2.3 SUPPLY 2.4 SUPPLY AND DEMAND TOGETHER 2.1 INTRODUCTION Market a group of buyers and sellers of a particular good or service Partitioners buyers, sellers Price vs Amount price – independent variable amount – induced variable Competitive market a market in which there are many buyers and many sellers so that each has a negligible impact on the market price Characteristics: the goods being offered for sale are all the same the buyers and sellers are so numerous that no single buyer or seller can influence the market price. MARKET PRODUCTION Market production involves sale in a market before consumption occurs Non-market production does not involve sale in market before consumption Marketing Human activity directed at satisfying needs and wants through exchange processes. Look at the list of examples of production and indicate which are non-market production and which are market production. Also indicate that are mixture of both. Sewing a dress using a sewing machine at home and using materials and a pattern bought from a fabric shop Catching fish using a home-made lure Watching at home with a group of friends a new-release video rented from the local video library Flying to America to go to Disneyland Swimming in your neighbor’s pool Buying a ticket for a rock concert Babysitting your neighbor’s children for $5 per hour Having a backyard barbecue using meat from the local butcher and salad vegetables from your own garden Buying Coke or Pepsi from a dispensing machine at the local mixed business and drinking it while walking home from school Going for a walk along a beach PRICE IN MARKETS ADAM SMITH AND THE INVISIBLE HAND 1776, The Wealth of Nations invisible hand 2.2 DEMAND Demand People have almost unlimited wants but limited resources. Wants become demands when backed by purchasing power. quantity demanded the amount of a good that buyers are willing and able to purchase law of demand Ceteris pa