PPT-Supply and Demand Chapter 3

THIRD EDITION ECONOMICS and MACROECONOMICS Paul Krugman Robin Wells What a competitive market is and how it is described by the supply and demand model What the demand curve and supply curve . . 3. Demand and Supply. Chapter 3. Demand, Supply and Relative Prices. Demand and supply determine relative prices.. The word “price” means relative price. Price is an . opportunity cost. .. If we predict a price will fall, we mean its price will fall relative to the average price of other goods and services.. Supply and Demand. You Are Here. Definitions. Supply and Demand: . the name of the most important model in all economics. Price: . the amount of money that must be paid for a unit of output. Market: . Supply and Demand. What you will learn in this Chapter. 1. What a . competitive market . is & how it is described by the . supply & demand model. 2. What a . demand curve . is & t. he difference between . Cattle Ranchers. Pages 238-241. Time Period: 1865-1980. Texas Cattle (page 238). In the 1860’s ranchers raised and sold longhorn cattle that lived on the Texas plains.. Vaqueros (Mexican cowhands) taught their methods of herding on horseback to other cowhands and ranchers in the Southwest. Supply & Demand. Price ($). Quantity (Units). Supply. Demand. P*. Q*. 1. Value, Prices, & Markets. Prices communicate information about the . value. of a good or service.. Prices arise from the . Supply and Demand. Slides created by Dr. Amy Scott. WAKE UP AND DON’T SMELL THE COFFEE. Who decided to raise the prices of coffee beans?. Nobody: prices went up because of events outside anyone’s control.. Where Prices Come From: The Interaction of Demand and Supply. 1. Ch. 2 Class Quiz. What is Cinder’s opportunity cost/day for producing a bird?. 4 Mice/day. . /. . 2 Birds/day = . 2 mice. What is Flounder’s . Today:. Aggregate demand. Why is it downward sloping?. Factors that affect the aggregate demand. Aggregate supply. Long-run aggregate supply. Short-run aggregate supply. Why is it upward sloping?. Factors that affect the short-run aggregate supply. 1. 4 Demand, Supply, and Equilibrium. 4.1 Markets. 4.2 How Do Buyers Behave?. 4.3 How Do Sellers Behave?. 4.4 Supply and Demand in Equilibrium. 4.5 What Would Happen if the Government Tried to Dictate the Price of Gasoline. 5.2 How Do Demand and Price Interact?. Demand. . is what people are willing and able to buy at various prices.. • Quantity demanded is a specific amount an individual is willing and able to . buy at . . by Wiley Miller. . . MARKETS. Institution that brings together . buyers (DEMAND) . and sellers (SUPPLY) of resources, goods and services. DEMAND is. Amount of a good or service consumers are . Essential Question:. What are demand and supply, and what factors influence them?. Demand and price. Demand comes at a price. . Burger. . . Quantity. demanded . – amount of a good/service consumers are willing to pay . The quantity of a specific product that a buyer is . able. . and . willing. to buy at a certain price. Usually at a particular . time. and . place. Remember those . time and place utilities . that add value to a product??. Demand and Supply are . most fundamental concepts of economics and it is the backbone of a market . economy.  . Demand . refers to how much (quantity) of a product or service is desired by buyers. .