Homework 3 Chapter 2 Question 1 Daniel Wonderly

Homework #3 Chapter 2 Question 1: Daniel Wonderly Question 5: James Washington Question 12: Ashlea Ward Question 17: Katia Trujillo Working with Graphs and Numbers: Question 1: Johanna Trujillo Question 2: Ty Treece Question 5: Melissa Steele Alternates: Jermaine Spence and Arturo Soliz

Homework #3 Chapter 2 Question 1: Shelly Arner Question 5: Albert Depalma Question 12: Yazan Hawatmeh Question 17: Jesus Herrera Working with Graphs and Numbers: Question 1: Kevin Jenkins Question 2: Kelsey Jones Question 5: Sophie Laureano Alternates: Marisa Navarro and Daniela Rosales

In-class exercise 3 Do we understand Chapter 2?

Chapter 3 Supply, Demand, and Price

Market • Market is an arrangement by which people exchange goods and services including money • Two sides – Buyer – Seller

Starting with the Buyer Side • Quantity demanded – Amount of a good people are willing and able to buy at a particular price at a particular point in time

Important parts of definition • • Willing Able Particular Price Particular point in time

Demand Quantity demanded over all prices during a specific point in time • Important parts: • Quantity demanded • All prices • Specific point in time

So….

Who does what in the Market? • Consumers – Buy goods – Sell Labor • Firms – Sell goods – Buy Labor

Circular Flow • Depiction of how the market works in the economy • Includes both buyers and sellers • Shows the flow of goods and services between consumers and firms

Law of Demand • As price of a good (decreases) increases the Quantity demanded of that good (increases) decreases

Demand Schedule • Numerical table of quantity demanded at different prices Price 4 3 2 1 Quantity 10 20 30 40

Demand Curve • Graphical representation of the demand schedule • Used to represent the relationship between price and quantity • Why type of relationship do you expect price and quantity to have?

Demand Schedule and Demand Curve

Market Demand Curves • Previous demand curve was for an individual – Single buyer • How can we get the market curve from individual demand curves? – All buyers • Sum the individual Demand curves…

Therefore….

Deriving a Market Demand Schedule & Curve

Deriving a Market Demand Schedule & Curve

Determinates of Demand • Income – Normal good – Inferior good • Preferences • Prices of Related Goods – Substitutes – Compliments

Determinates Continued… • Number of Buyers • Expectations of Future