Markets Demand Defined Demand Graphed Changes in Demand

  • Slides: 46
Download presentation
Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in

Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 -1 Next Slide 3 CHAPTER Individual Markets: Demand & Supply Copyright Mc. Graw-Hill/Irwin, 2005

MARKETS DEFINED Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed

MARKETS DEFINED Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages POTENTIAL BUYERS Key Terms Previous Slide End Show 3 -2 Next Slide POTENTIAL SELLERS MARKETS Copyright Mc. Graw-Hill/Irwin, 2005

DEMAND DEFINED Markets DEMAND SCHEDULE Demand Defined Demand Graphed Changes in Demand Supply Defined

DEMAND DEFINED Markets DEMAND SCHEDULE Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 -3 Next Slide P $5 4 3 2 1 QD 10 20 35 55 80 Various Amounts A Series of Possible Prices …a specified time period …other things being equal Copyright Mc. Graw-Hill/Irwin, 2005

LAW OF DEMAND Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply

LAW OF DEMAND Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 -4 Next Slide An inverse relationship exists between price and quantity demanded • As Price Falls… …Quantity Demanded Rises • As Price Rises… …Quantity Demanded Falls Copyright Mc. Graw-Hill/Irwin, 2005

LAW OF DEMAND Markets Demand Defined Demand Graphed Changes in Demand • Diminishing Marginal

LAW OF DEMAND Markets Demand Defined Demand Graphed Changes in Demand • Diminishing Marginal Utility Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide Next Slide End Show 3 -5 Copyright Mc. Graw-Hill/Irwin, 2005

LAW OF DEMAND Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply

LAW OF DEMAND Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed • Diminishing Marginal Utility • Income Effect Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide Next Slide End Show 3 -6 Copyright Mc. Graw-Hill/Irwin, 2005

LAW OF DEMAND Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply

LAW OF DEMAND Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses • Diminishing Marginal Utility • Income Effect • Substitution Effect Shortages Key Terms Previous Slide Next Slide End Show 3 -7 Copyright Mc. Graw-Hill/Irwin, 2005

LAW OF DEMAND Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply

LAW OF DEMAND Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide Next Slide • • • Diminishing Marginal Utility Income Effect Substitution Effect Demand Curve Individual and Market Demand End Show 3 -8 Copyright Mc. Graw-Hill/Irwin, 2005

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 -9 Next Slide CORN P $5 4 3 2 1 QD 10 20 35 55 80 $5 Plot the Points 4 3 2 1 o 10 20 30 40 50 60 70 80 Quantity of Corn Copyright Mc. Graw-Hill/Irwin, 2005 Q

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 10 Next Slide CORN P $5 4 3 2 1 QD 10 20 35 55 80 $5 Plot the Points 4 3 2 1 o 10 20 30 40 5055 60 70 80 Quantity of Corn Copyright Mc. Graw-Hill/Irwin, 2005 Q

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 11 Next Slide CORN P $5 4 3 2 1 QD 10 20 35 55 80 $5 Plot the Points 4 3 2 1 o 10 20 30 40 50 60 70 80 35 Quantity of Corn Copyright Mc. Graw-Hill/Irwin, 2005 Q

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 12 Next Slide CORN P $5 4 3 2 1 QD 10 20 35 55 80 $5 Plot the Points 4 3 2 1 o 10 20 30 40 50 60 70 80 Quantity of Corn Copyright Mc. Graw-Hill/Irwin, 2005 Q

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 13 Next Slide CORN P $5 4 3 2 1 QD 10 20 35 55 80 $5 Plot the Points 4 3 2 1 o 10 20 30 40 50 60 70 80 Quantity of Corn Copyright Mc. Graw-Hill/Irwin, 2005 Q

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 14 Next Slide CORN P $5 4 3 2 1 QD 10 20 35 55 80 $5 Connect the Points 4 3 2 1 o D 10 20 30 40 50 60 70 80 Quantity of Corn Copyright Mc. Graw-Hill/Irwin, 2005 Q

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 15 Next Slide CORN P $5 4 3 2 1 QD 10 20 35 55 80 $5 What if Demand Increases? 4 3 2 1 o D 10 20 30 40 50 60 70 80 Quantity of Corn Copyright Mc. Graw-Hill/Irwin, 2005 Q

GRAPHING DEMAND Price of Corn Markets Demand Graphed Changes in Demand Supply Defined Supply

GRAPHING DEMAND Price of Corn Markets Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 16 Next Slide Increase in Quantity Demanded P Demand Defined CORN P $5 4 3 2 1 QD 10 30 20 40 35 60 55 80 80 + $5 4 3 2 1 o Increase in Demand 10 20 30 40 50 60 70 80 Quantity of Corn Copyright Mc. Graw-Hill/Irwin, 2005 D’ D Q

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 17 Next Slide CORN P $5 4 3 2 1 QD 10 20 35 55 80 $5 What if Demand Decreases? 4 3 2 1 o D 10 20 30 40 50 60 70 80 Quantity of Corn Copyright Mc. Graw-Hill/Irwin, 2005 Q

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand

GRAPHING DEMAND Price of Corn Markets P Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 18 Next Slide CORN P $5 4 3 2 1 QD 10 -20 10 35 20 55 40 80 60 Decrease in Quantity Demanded $5 4 3 2 1 o Decrease in Demand 10 20 30 40 50 60 70 80 Quantity of Corn Copyright Mc. Graw-Hill/Irwin, 2005 D D’ Q

Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in

Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium – Normal (Superior) & Inferior Goods Surpluses Shortages • Prices of Related Goods Key Terms Previous Slide End Show 3 - 19 DETERMINANTS OF DEMAND • Tastes • Number of Buyers • Income Next Slide – Substitutes & Complements – Unrelated Goods • Expectations Copyright Mc. Graw-Hill/Irwin, 2005

SUPPLY DEFINED Markets Demand Defined Demand Graphed SUPPLY SCHEDULE Changes in Demand Supply Defined

SUPPLY DEFINED Markets Demand Defined Demand Graphed SUPPLY SCHEDULE Changes in Demand Supply Defined Supply Graphed Various Amounts Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 20 Next Slide Copyright Mc. Graw-Hill/Irwin, 2005 CORN P QS $1 2 3 4 5 5 20 35 50 60

SUPPLY DEFINED Markets Demand Defined Demand Graphed SUPPLY SCHEDULE Changes in Demand Supply Defined

SUPPLY DEFINED Markets Demand Defined Demand Graphed SUPPLY SCHEDULE Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 21 Next Slide Various Amounts CORN P QS $1 A Series of Possible Prices 2 3 4 5 5 20 35 50 60 …a specified time period …other things being equal Copyright Mc. Graw-Hill/Irwin, 2005

LAW OF SUPPLY Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply

LAW OF SUPPLY Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages End Show 3 - 22 • As Price Rises… …Quantity Supplied Rises Key Terms Previous Slide A direct relationship exists between price and quantity supplied Next Slide • As Price Falls… …Quantity Supplied Falls Copyright Mc. Graw-Hill/Irwin, 2005

GRAPHING SUPPLY Price of Corn Markets Demand Defined Demand Graphed P Plot the Points

GRAPHING SUPPLY Price of Corn Markets Demand Defined Demand Graphed P Plot the Points $5 CORN P QS Changes in Demand Supply Defined 4 $5 4 3 2 1 Supply Graphed Changes in Supply 3 Equilibrium Surpluses Shortages 2 Key Terms 1 Previous Slide End Show 3 - 23 Next Slide o 5 10 Copyright Mc. Graw-Hill/Irwin, 2005 20 30 40 50 60 70 80 Quantity of Corn Q 60 50 35 20 5

GRAPHING SUPPLY Plot the Points Price of Corn Markets Demand Defined Demand Graphed P

GRAPHING SUPPLY Plot the Points Price of Corn Markets Demand Defined Demand Graphed P $5 CORN P QS Changes in Demand Supply Defined 4 $5 4 3 2 1 Supply Graphed Changes in Supply 3 Equilibrium Surpluses Shortages 2 Key Terms 1 Previous Slide End Show 3 - 24 Next Slide o 10 20 30 40 50 60 70 80 Copyright Mc. Graw-Hill/Irwin, 2005 Quantity of Corn Q 60 50 35 20 5

GRAPHING SUPPLY Plot the Points Price of Corn Markets Demand Defined Demand Graphed P

GRAPHING SUPPLY Plot the Points Price of Corn Markets Demand Defined Demand Graphed P $5 CORN P QS Changes in Demand Supply Defined 4 $5 4 3 2 1 Supply Graphed Changes in Supply 3 Equilibrium Surpluses Shortages 2 Key Terms 1 Previous Slide End Show 3 - 25 Next Slide o 10 20 3035 40 50 60 70 80 Copyright Mc. Graw-Hill/Irwin, 2005 Quantity of Corn Q 60 50 35 20 5

GRAPHING SUPPLY Plot the Points Price of Corn Markets Demand Defined Demand Graphed P

GRAPHING SUPPLY Plot the Points Price of Corn Markets Demand Defined Demand Graphed P $5 CORN P QS Changes in Demand Supply Defined 4 $5 4 3 2 1 Supply Graphed Changes in Supply 3 Equilibrium Surpluses Shortages 2 Key Terms 1 Previous Slide End Show 3 - 26 Next Slide o 10 20 30 40 50 60 70 80 Copyright Mc. Graw-Hill/Irwin, 2005 Quantity of Corn Q 60 50 35 20 5

GRAPHING SUPPLY Plot the Points Price of Corn Markets Demand Defined Demand Graphed P

GRAPHING SUPPLY Plot the Points Price of Corn Markets Demand Defined Demand Graphed P $5 CORN P QS Changes in Demand Supply Defined 4 $5 4 3 2 1 Supply Graphed Changes in Supply 3 Equilibrium Surpluses Shortages 2 Key Terms 1 Previous Slide End Show 3 - 27 Next Slide o 10 20 30 40 50 60 70 80 Copyright Mc. Graw-Hill/Irwin, 2005 Quantity of Corn Q 60 50 35 20 5

GRAPHING SUPPLY Price of Corn Markets Demand Defined Demand Graphed P S $5 CORN

GRAPHING SUPPLY Price of Corn Markets Demand Defined Demand Graphed P S $5 CORN P QS Changes in Demand Supply Defined 4 Supply Graphed Changes in Supply 3 Equilibrium Surpluses Shortages 2 Key Terms 1 Previous Slide End Show 3 - 28 Next Slide o Connect the Points 10 20 30 40 50 60 70 80 Copyright Mc. Graw-Hill/Irwin, 2005 Quantity of Corn $5 4 3 2 1 Q 60 50 35 20 5

GRAPHING SUPPLY Price of Corn Markets Demand Defined Demand Graphed P S $5 Changes

GRAPHING SUPPLY Price of Corn Markets Demand Defined Demand Graphed P S $5 Changes in Demand Supply Defined What if Supply Increases? 4 Supply Graphed Changes in Supply 3 Equilibrium Surpluses Shortages 2 Key Terms 1 Previous Slide End Show 3 - 29 Next Slide o 10 20 30 40 50 60 70 80 Copyright Mc. Graw-Hill/Irwin, 2005 Quantity of Corn CORN P QS $5 4 3 2 1 Q 60 50 35 20 5

GRAPHING SUPPLY Price of Corn Markets Demand Defined Demand Graphed P $5 Changes in

GRAPHING SUPPLY Price of Corn Markets Demand Defined Demand Graphed P $5 Changes in Demand Supply Defined 4 Supply Graphed Increase in Supply Changes in Supply 3 Equilibrium Surpluses Shortages 2 Key Terms 1 Previous Slide End Show 3 - 30 Next Slide S S’ CORN P QS $5 4 3 Increase 2 in Quantity 1 Supplied o 10 20 30 40 50 60 70 80 Copyright Mc. Graw-Hill/Irwin, 2005 Quantity of Corn Q 60 80 50 70 35 60 20 45 5 30

GRAPHING SUPPLY Price of Corn Markets Demand Defined Demand Graphed P Changes in Demand

GRAPHING SUPPLY Price of Corn Markets Demand Defined Demand Graphed P Changes in Demand Supply Defined 4 Supply Graphed Changes in Supply 3 Equilibrium Surpluses Shortages S $5 2 Key Terms What if Supply Decreases? 1 Previous Slide End Show 3 - 31 Next Slide o 10 20 30 40 50 60 70 80 Copyright Mc. Graw-Hill/Irwin, 2005 Quantity of Corn CORN P QS $5 4 3 2 1 Q 60 50 35 20 5

GRAPHING SUPPLY Price of Corn Decrease Markets Demand Defined Demand Graphed P $5 Changes

GRAPHING SUPPLY Price of Corn Decrease Markets Demand Defined Demand Graphed P $5 Changes in Demand Supply Defined in Supply 4 Changes in Supply 3 Surpluses Shortages 2 Key Terms 1 Previous Slide End Show 3 - 32 Next Slide o S CORN P QS $5 4 3 Decrease 2 in Quantity 1 Supplied Supply Graphed Equilibrium S’ 10 20 30 40 50 60 70 80 Copyright Mc. Graw-Hill/Irwin, 2005 Quantity of Corn Q 60 45 50 30 35 20 20 0 5 --

Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in

Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 33 Next Slide DETERMINANTS OF SUPPLY • Resource Prices • Technology • Taxes & Subsidies • Prices of Other Goods • Price Expectations • Number of Sellers Copyright Mc. Graw-Hill/Irwin, 2005

Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in

Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 34 Next Slide DETERMINANTS OF SUPPLY • Resource Prices • Technology Combining • Taxes & with Subsidies • Prices Demand of Other Goods • Price Expectations • Number of Sellers Copyright Mc. Graw-Hill/Irwin, 2005

MARKET DEMAND & SUPPLY Markets Demand Defined Demand Graphed Changes in Demand Supply Defined

MARKET DEMAND & SUPPLY Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 35 BUSHELS OF CORN P $5 4 3 2 1 QD 10 20 35 55 80 MARKET x 200 DEMAND B U Y E R S 2, 000 4, 000 7, 000 11, 000 16, 000 BUSHELS OF CORN P QS $5 4 3 2 1 60 50 35 20 5 MARKET 200 SUPPLY S x E L L E R 12, 000 10, 000 7, 000 4, 000 1, 000 S Next Slide EQUILIBRIUM Copyright Mc. Graw-Hill/Irwin, 2005 G h p ra y… l l ica

MARKET DEMAND & SUPPLY Price of Corn Markets Demand Defined Demand Graphed Changes in

MARKET DEMAND & SUPPLY Price of Corn Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 36 Next Slide CORN MARKET P QD $5 2, 000 4 4, 000 3 7, 000 2 11, 000 1 16, 000 P S $5 CORN MARKET P QS 4 Market $5 Clearing Equilibrium 4 12, 000 10, 000 3 7, 000 2 4, 000 1 1, 000 3 2 1 o D 2 Copyright Mc. Graw-Hill/Irwin, 2005 4 6 78 10 12 14 16 Quantity of Corn Q

MARKET DEMAND & SUPPLY Price of Corn Markets Demand Defined Demand Graphed Changes in

MARKET DEMAND & SUPPLY Price of Corn Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 37 Next Slide CORN MARKET P QD $5 2, 000 4 4, 000 3 7, 000 2 11, 000 1 16, 000 P Surplus $5 CORN MARKET S P QS At a $4 price 4 $5 supplied than 4 demanded 3 2 1 more is being 3 2 1 o D 2 Copyright Mc. Graw-Hill/Irwin, 2005 4 6 78 10 12 14 16 Quantity of Corn Q 12, 000 10, 000 7, 000 4, 000 1, 000

MARKET DEMAND & SUPPLY Price of Corn Markets Demand Defined Demand Graphed Changes in

MARKET DEMAND & SUPPLY Price of Corn Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 38 Next Slide CORN MARKET P QD $5 2, 000 4 4, 000 3 7, 000 2 11, 000 1 16, 000 P S $5 CORN MARKET P QS At a $2 price 4 $5 demanded than 4 3 supplied 2 1 Shortage more is being 3 2 1 o D 2 Copyright Mc. Graw-Hill/Irwin, 2005 4 6 78 101112 14 16 Quantity of Corn Q 12, 000 10, 000 7, 000 4, 000 1, 000

MARKET DEMAND & SUPPLY Price of Corn Markets Demand Defined Demand Graphed Changes in

MARKET DEMAND & SUPPLY Price of Corn Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 39 Next Slide CORN MARKET P QD $5 2, 000 4 4, 000 3 7, 000 2 11, 000 1 16, 000 P Surplus $5 S 4 3 2 Shortage 1 o 2 Copyright Mc. Graw-Hill/Irwin, 2005 4 6 78 101112 14 16 Quantity of Corn CORN MARKET P QS $5 4 3 2 1 D Q 12, 000 10, 000 7, 000 4, 000 1, 000

MARKET EQUILIBRIUM Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed

MARKET EQUILIBRIUM Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 40 Next Slide • • Equilibrium Price & Quantity Rationing Function of Prices Changes in Demand Changes in Quantity Demanded • Changes in Supply • Changes in Quantity Supplied Copyright Mc. Graw-Hill/Irwin, 2005

Complex Cases Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed

Complex Cases Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Key Terms End Show 3 - 41 • Supply Increases; Demand Decreases – Prices Decrease – Quantity Indeterminate • Supply Decreases; Demand Increases Shortages Previous Slide Multiple Shifts… Next Slide – Price Increases – Quantity Indeterminate Copyright Mc. Graw-Hill/Irwin, 2005

Complex Cases Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed

Complex Cases Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Key Terms End Show 3 - 42 • Supply Increases; Demand Increases – Prices Indeterminate – Quantity Increases • Supply Decreases; Demand Decreases Shortages Previous Slide Multiple Shifts… Next Slide – Price Indeterminate – Quantity Decreases Copyright Mc. Graw-Hill/Irwin, 2005

Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in

Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 43 Next Slide Government Set Prices • Price Ceilings –Shortages –Rationing Problem –Black Markets –Rent Controls • Price Floors –Surpluses Copyright Mc. Graw-Hill/Irwin, 2005

Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in

Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 44 Next Slide Government Set Prices • Price Ceilings –Shortages –Rationing Problem –Black Markets –Rent Controls • Price Floors –Surpluses Copyright Mc. Graw-Hill/Irwin, 2005

Key Terms market demand schedule law of demand diminishing marginal utility income effect substitution

Key Terms market demand schedule law of demand diminishing marginal utility income effect substitution effect demand curve determinants of demand normal goods inferior goods substitute good complementary good change in demand Copyright Mc. Graw-Hill/Irwin, 2005 change in quantity demanded supply schedule law of supply curve determinants of supply change in quantity supplied surplus shortage equilibrium price equilibrium quantity rationing function of prices price ceiling and floor BACK END

Next: Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes

Next: Markets Demand Defined Demand Graphed Changes in Demand Supply Defined Supply Graphed Changes in Supply Equilibrium Surpluses Shortages Key Terms Previous Slide End Show 3 - 46 Next Slide Chapter 4 Copyright Mc. Graw-Hill/Irwin, 2005