Demand Supply Market Equilibrium参考.ppt

Chapter 2 Demand, Supply, Market Equilibrium Demand Quantity demanded (Qd) Amount of a good or service consumers are willing able to purchase during a given period of time General Demand Function Six variables that influence Qd Price of good or service (P) Incomes of consumers (M) Prices of related goods services (PR) General Demand Function b, c, d, e, f, g are slope parameters Measure effect on Qd of changing one of the variables while holding the others constant Sign of parameter shows how variable is related to Qd Positive sign indicates direct relationship Negative sign indicates inverse relationship General Demand Function Inverse for complements Direct Demand Function The direct demand function, or simply demand, shows how quantity demanded, Qd , is related to product price, P, when all other variables are held constant Qd = f(P) Law of Demand Qd increases when P falls Qd decreases when P rises, all else constant ?Qd/?P must be negative Inverse Demand Function Traditionally, price (P) is plotted on the vertical axis quantity demanded (Qd) is plotted on the horizontal axis The equation plotted is the inverse demand function, P = f(Qd) Graphing Demand Curves A point on a direct demand curve shows either: Maximum amount of a good that will be purchased for a given price Maximum price consumers will pay for a specific amount of the good A Demand Curve (Figure 2.1) Graphing Demand Curves Change in quantity demanded Occurs when price changes Movement along demand curve Change in demand Occurs when one of the other variables, or determinants of demand, changes Demand curve shifts rightward or leftward Shifts in Demand (Figure 2.2) Supply Quantity supplied (Qs) Amount of a good or service offered for sale during a given period of time Supply Six variables that influence Qs Price of good or service (P) Input prices (PI ) Prices of goods related in production (Pr) Technological advances (T) Expected future price of product (Pe) Number of firms producin