Скачать презентацию Unit 2 Supply Demand Demand Basics
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Скачать презентацию Unit 2 Supply Demand Demand Basics
Скачать презентацию Unit 2 Supply Demand Demand Basics
Unit 2 Supply & Demand
Demand Basics • Demand Schedule and Demand Curve
Demand Basics • Demand versus Quantity Demanded • Demand- quantities consumers are willing and able to buy at various prices • Quantity Demanded- quantity consumers are willing and able to buy at a given price
Demand Basics • Demand versus Quantity Demanded • Demand- the whole curve • Quantity Demanded- a point on the curve
Demand Basics • Demand versus Quantity Demanded • Change in Demand- the whole curve shifts • Change in Quantity Demanded- move from one point on the curve to another
Demand Basics • Changes in Demand – Consumer Income • Normal v. Inferior Goods – Population – Preference/Taste – Price of Other Goods • Compliments • Substitutes – Expectation of Change in Price
Why Demand Slopes Downward? • Income Effect • Substitute Effect • Diminishing Marginal Utility
Why Demand Slopes Downward? • Income Effect – Higher price = Lower purchasing power – Lower price = Higher purchasing power – “ability to buy”
Why Demand Slopes Downward? • Substitute Effect- think opportunity cost – Higher price = Lower relative price of substitutes – Lower price = Higher relative price of substitutes
Why? • 1 st pizza for full price ($11. 00), get a 2 nd for $5?
Why? • Buy one pair at regular price and get the second pair half off? • BOGO Days!
Why Demand Slopes Downward? • Diminishing Marginal Utility
Why Demand Slopes Downward? • Diminishing Marginal Utility – MU= satisfaction quantified in dollars of an additional unit of consumption – Marginal Utility ALWAYS* decreases with additional consumption
Why Demand Slopes Downward? • Diminishing Marginal Utility/Benefit • Cost-Benefit Analysis – How many slices will you consume? – MU=MC – MB=MC
Individual & Market Demand Curve • Horizontal sum of individual demand curves
Supply Basics • Supply Schedule and Supply Curve
Supply Basics • Supply versus Quantity Supplied • Supply - quantities producers are willing and able to sell at various prices • Quantity Supplied- quantity producers are willing and able to sell at a given price
Supply Basics • Supply versus Quantity Supplied • Supply - the whole curve • Quantity Supplied- a point on the curve
Supply Basics • Change in Supply - the whole curve shifts • Change in Quantity Supplied- move from one point on the curve to another
Supply Basics- Changes • • # of Producers Technology Price of Inputs Substitutes of Production Compliments of Production Taxes and Subsidies Other Regulations
Individual & Market Supply Curve • Horizontal sum of individual supply curves
What if they both shift? • Equilibrium Price? • Equilibrium Quantity? • One change is certain • The other is ambiguous
What if they both shift? • Coffee – New Rebecca Black Song – New Fertilizer
What if they both shift? • Same Shift- know Q • Opposite Shift- know P
Equilibrium Price = Market Clearing Price
Let’s Review • • Shifts Double Shifts Ceilings and Floors Shortage and Surplus ---------------------Quantifying Shortage and Surplus Other Effects of Ceilings and Floors
PED
PED • Relationship between % change in price and % change in quantity
PED Perfectly Inelastic = 0 Unit Elastic = 1 Perfectly Elastic =
PED Perfectly Inelastic = 0 • Inelastic <1 Unit Elastic = 1 • Unit Elastic = 1 Perfectly Elastic = • Elastic > 1
If the market price is above equilibrium price…
If the market price is below equilibrium price…
S & D for Non-Smart Phones (inferior good) • Decrease in unemployment P Q
S & D for Non-Smart Phones (inferior good) • Increase in the price of Smart Phones P P Q Q
S & D for Non-Smart Phones (inferior good) • Gov’t subsidy for the production of smart phones P P Q Q
Price Controls Effects beyond Surpluses and Shortages
Price Controls Effects beyond Surpluses and Shortages • BOTH reduce the quantity of a good bought and sold
Price Ceilings • Shortages • Inefficiencies • Black Markets
Price Ceilings- Inefficiencies • Misallocation of Resources – Need and willingness to pay • Wasted Resources – Time and money spent overcoming the shortage • Inefficiently Low Quality
Price Ceilings- Black Markets • Illegal Markets • Prices ABOVE equilibrium – Prices account for additional cost in the form of risk
How to stop Canal Street Sales?
Price Ceilings Non-Binding • Set above equilibrium • Market prices will remain below the ceiling
Price Floors Non-Binding • Set below equilibrium • Market prices will remain above the floor
Price Floors • Surpluses • Inefficiencies • Black Markets
Price Floors- Inefficiencies • Misallocation of Resources – Those willing to sell at the lowest price do not always succeed • Wasted Resources • Inefficiently High Quality
Price Floors- Black Markets • Illegal Markets • Prices below equilibrium – Prices account for the relatively low number of consumers willing to break the law
Скачать презентацию Unit 2 Supply Demand Demand Basics
15a354b6d0139f5aa4523c637adcedaf.ppt