PPT-Chapter 4 Demand, Supply, and Equilibrium

1 4 Demand Supply and Equilibrium 41 Markets 42 How Do Buyers Behave 43 How Do Sellers Behave 44 Supply and Demand in Equilibrium 45 What Would Happen if the Government Tried to Dictate the Price of Gasoline. © Peter . Berck . 2012. Lecture Outline. Goods. People Demand Goods; . Shift in demand. Firms . Supply Goods; . Keep Supply and Demand Separate. Demand and Supply intersect at the equilibrium price and . 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: . 1. 2. What is a Market?. Market. is a mechanism through which buyers and sellers (individuals, firms, agents or dealers) of a good (or service) interact to determine price and quantity of a product. . 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 . Chapter 4. Outline. Equilibrium and the Adjustment Process. A Free Market Maximizes Producer . Plus Consumer . Surplus (the Gains from . Trade. ). Does the Model Work? Evidence . from the . Laboratory. 4. Last chapter illustrated scarcity, using the PPF. Societies need a mechanism to allocate scarce resources.. Markets are the most popular mechanism that allocates scarce resources. . Most of the . 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 . The Basic Decision-Making Units. A . firm. is an organization that transforms resources (inputs) into products (outputs). Firms are the primary producing units in a market economy.. An . entrepreneur. 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 . Demand & Supply Together. Bringing Supply and Demand Together. How is the price of a good determined?. The market forces of supply AND demand work simultaneously to determine the price.. The law of supply and demand. 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 . What are they Meder?. The three questions are?. Does the event (headline ) affect Demand, Supply, or Both?. Does the event (headline . ) shift the graph to the right (increase) or Left (decrease)?. What are the new equilibrium price and quantity? (P2 & Q2). demand, supply, equilibrium. PRESENTATION FOR ECONOMICS HONOURS STUDENTS, SEMESTER I. CONCEPTS:. NATURE OF ECONOMICS. Traditional economic theory has developed along two concepts; (1) Normative and (2) Positive. .