微观经济学PPT02.pptVIP

Chapter 2 Supply and Demand Main Topics Demand Supply Market equilibrium Elasticities of demand and supply Demand Curves Product’s demand curve shows: How much buyers of the product want to buy at each possible price Holding fixed all other factors that affect demand On a graph: vertical axis shows $ per unit of the good, horizontal axis shows quantity demanded per unit of time Downward sloping (buying the product is less attractive when the price is high than when the price is low) Determinants of Demand Demand curve holds all factors other than the product’s price constant: Population growth Consumer tastes and incomes Prices of other products Substitutes (An increase in the price of one product causes buyers to demand more of the other, all else equal) Complements (An increase in the price of product causes buyers to demand less of the other, all else equal) Government taxes or regulations Shifts and Movements Along a Demand Curve Change in price of the product causes a movement along the demand curve A change in the quantity demanded Change in another factor causes the entire demand curve to shift A change in demand Figure 2.1: Demand Curve for U.S. Corn Market (hypothetical) Demand Functions Product’s demand function is a mathematical representation of its demand Describes the amount of the product buyers demand for each possible combination of price and other factors Can be determined by applying statistical techniques to historical data Sample Demand Function Demand for corn affected by: price of corn, price of potatoes, price of butter, consumer incomes Increases in the prices of corn and butter will decrease the amount of corn buyers demand Increases in the price of potatoes will increase the amount of corn buyers demand Supply Curves Product’s supply curve shows: How much sellers of the product want to sell at each possible price Holding fixed all other factors that affect supply On a graph: vertical axis shows $ per unit of the good, horizontal axis s