Demand and Supply: Using Graphs to Explain the Price of Gasoline<br />
What is a Market?<br />An institution or mechanism that brings together buyers and sellers<br />Common element in all mark...
Demand<br />Law of Demand: All else equal, as the price decreases, the quantity demanded rises<br />Demand is how much ind...
Determinants of Demand<br />Things other than price that affect why people buy gasoline<br />Change in buyer tastes (what ...
Changes in Demand<br />              P<br />              	D”D      D’<br />25                  50                        ...
Supply<br />Law of Supply: All else equal, as price rises, the quantity supplied rises<br />Changes in price: movements al...
Determinants of Supply<br />Things other than price affect why firms sell gasoline<br />Change in resource prices<br />Cha...
Changes in Supply<br />           P<br />                 S”S<br />            P                                          ...
Equilibrium and Change in Demand<br />Equilibrium: demand and supply intersect <br />Quantity demanded equals the quantity...
Equilibrium Price and Quantity<br />           P<br />                                     S<br />        $1.00<br />     ...
Price and Changes in Demand<br />           P<br />S<br />        $1.50    <br />        $1.00<br />        $0.75<br />   ...
Equilibrium and Change in Supply<br />Increase supply<br />Price decreases<br />Quantity demand increases<br />Decrease su...
Price and Changes in Supply<br />           P<br />                          S”S<br />        $1.50                       ...
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Supply Demand

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Economics Lecture on Supply and Demand

PPT by Buck Institute & Edited by Mitchell Nail

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Supply Demand

  1. 1. Demand and Supply: Using Graphs to Explain the Price of Gasoline<br />
  2. 2. What is a Market?<br />An institution or mechanism that brings together buyers and sellers<br />Common element in all markets: goods are traded<br />We can show how markets work with diagrams<br />
  3. 3. Demand<br />Law of Demand: All else equal, as the price decreases, the quantity demanded rises<br />Demand is how much individuals are able and willing to purchase at any price, during a period of time<br />Downsloping demand curve (inverse relationship)<br />Changes in price: movements along the curve<br />P<br /> D<br /> Quantity of gasoline<br />
  4. 4. Determinants of Demand<br />Things other than price that affect why people buy gasoline<br />Change in buyer tastes (what they want)<br />Change in the number of buyers<br />Change in income<br />Change in prices of related goods<br />Change in expectations<br />Shifts the curve [The curve only deals with price and consumption.]<br />
  5. 5. Changes in Demand<br /> P<br /> D”D D’<br />25 50 100 Q<br />
  6. 6. Supply<br />Law of Supply: All else equal, as price rises, the quantity supplied rises<br />Changes in price: movements along the curve<br /> P<br /> S<br /> Q<br />
  7. 7. Determinants of Supply<br />Things other than price affect why firms sell gasoline<br />Change in resource prices<br />Change in technology<br />Change in taxes or subsidies<br />Change in prices of other goods related in production<br />Change in expectations<br />Changes in number of sellers<br />Shifts the curve<br />
  8. 8. Changes in Supply<br /> P<br /> S”S<br /> P S’<br /> 25 50 100 Q<br />
  9. 9. Equilibrium and Change in Demand<br />Equilibrium: demand and supply intersect <br />Quantity demanded equals the quantity supplied<br />Determines equilibrium (market) price and quantity<br />Increase demand: Price increases, quantity supply increases<br />Decrease demand: Price decreases, quantity supply decreases<br />
  10. 10. Equilibrium Price and Quantity<br /> P<br /> S<br /> $1.00<br /> D<br />50 Q<br />
  11. 11. Price and Changes in Demand<br /> P<br />S<br /> $1.50 <br /> $1.00<br /> $0.75<br /> D” D D’<br />25 50 100 Q<br />
  12. 12. Equilibrium and Change in Supply<br />Increase supply<br />Price decreases<br />Quantity demand increases<br />Decrease supply <br />Price increases<br />Quantity demand decreases<br />
  13. 13. Price and Changes in Supply<br /> P<br /> S”S<br /> $1.50 S’<br /> $1.00<br /> $0.75<br /> 25 50 100 Q<br />
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