CHAPTER 3: Topics

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CHAPTER 3Topics

• 3.1 Demand
• 3.2 Supply
• 3.3 Market Equilibrium
• 3.4 Price Controls

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• Demand
• a schedule or curve
• shows amounts consumers are willing and able to
  buy
• at each of a series of prices
• during a specified period of time

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Assignment

• Demand for t-shirts inCanada/week
• 15 5 thousand
• 10 7 thousand
• 8 10 thousand
• 5 14 thousand

PRICE
15
10
15 5 thousand
10 7 thousand
5
8 10 thousand
5 14 thousand
5
10
15
QUANTITY (000s)
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Law of Demand As price ?, quantity demanded
?.
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• Quantity Demanded
• relationship between specific price and
  quantity
• single point on a curve or schedule
• changes in response to price

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Quantity Demanded

• Change in Qd
• Move along a demand curve
• In response to change in price

PRICE
15
D1
10
?
5
5
10
15
QUANTITY
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Shifts in Demand

• Demand for Chickens / Day
• at 10, Q demanded 5
• at 5, Q demanded 9
• New Demand for Chickens / Day
• at 10, Q demanded ? 7
• at 5, Q demanded ? 11

PRICE
15
D1
D2
NEWS FLASHChicken Prevents Cancer
10
?
5
5
10
15
QUANTITY
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• Demand
• relationship between range of prices and
  quantities
• entire curve or schedule
• changes in response to underlying factors

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Determinants of Demand Factors affecting
the entire demand curve.
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• Determinants of Demand
• Population
• Incomes
• Exception inferior goods
• Preferences
• Expectations
• Related goods
• Price of complements, substitutes

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• Substitute Goods
• Goods that are substituted for each other(eg
  coffee and tea)
• If price of coffee ? ? quantity of coffee
  demanded ? BUT demand for tea ?

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• Complementary Goods
• Goods that are consumed together(eg coffee and
  donuts)
• If price of coffee ? ? quantity of coffee
  demanded ? AND demand for donuts ?

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• Homework
• Read Section 3.1 - Demand