Ch03 ppt

PART 2 THE PRICE MECHANISM Chapter 3 Demand, supply and equilibrium Supply Demand

Lecture Plan ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Demand ,[object Object],[object Object],[object Object],[object Object],[object Object]

The Demand Schedule ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The Demand Curve ,[object Object],Example: Demand curve for Big Macs Quantity Price $ 5 2 1 3 4 100 200 300 400 500

The Law of Demand ,[object Object],[object Object],[object Object],(cont.)

The Law of Demand (cont.) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The Income Effect ,[object Object],[object Object],[object Object],[object Object]

The Substitution Effect ,[object Object],[object Object],[object Object],[object Object],[object Object]

The Law of Supply ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The Supply Schedule ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The Supply Curve ,[object Object],[object Object],Price Quantity $ Supply curve 1 2 3 4 5 200 300 400 500 600

Market Equilibrium ,[object Object],P Q S D Equilibrium point ( P e ) P e Q e (cont.)

Market Equilibrium (cont.) ,[object Object],[object Object],[object Object],[object Object]

Market Disequilibrium ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Market Shortage ,[object Object],P Q S D P e Q s Q d Shortage

Market Surplus ,[object Object],P Q S D Q d Q s Surplus

Changes in Demand ,[object Object],[object Object],[object Object]

An Increase in Demand ,[object Object],Q P D D 1 S E E 1 P e P e 1 EQ EQ 1

A Decrease in Demand ,[object Object],[object Object],Q S D D 1 E E 1 Q e 1 Q e P P e P e 1

Conditions of Demand ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Changes in Supply ,[object Object],[object Object]

An Increase in Supply ,[object Object],P Q S D S 1 E E 1 P e P e 1 Q e Q e 1

A Decrease in Supply ,[object Object],P Q S D S 1 E E 1 P e 1 P e Q e 1 Q e

Conditions of Supply ,[object Object],[object Object],[object Object],[object Object]

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