1. Supply and Demand Unit 4: Microeconomics

2. I. Demand

7. 5. Population: Population changes in age, goods demanded change.

8. 6. Tastes and advertising: Waves of popularity & advertising will impact demand.

9. 7. Related goods: Complements are goods that are bought together.

11. 2. Government may intervene with rationing

12. a. WWII is an example of high demand, rationing rubber, fuel, nylon, etc.

13. b. 1970’s: Gasoline rationing.

14. II. Supply

17. 2. Technology: Efficiency in production will increase production and supply.

18. 3. Subsidy: Government financial assistance for producers.

19. 4. Excise tax: Tax on the production, distribution, sale of product.

20. 5. Regulation: Limits on the production will decrease supply.

21. III. Supply and Demand Together

22. A. Equilibrium Equilibrium Price Surplus Shortage Demand Supply Price Floor : Minimum Wage Price Ceiling: Rent Control

24. 1. Elastic: Items that are highly sensitive to price change.

25. 2. Inelastic: Items that are not sensitive to price.

26. 3. Elasticity of supply: Sensitivity of suppliers to price change.

27. a. Elastic: Suppliers will be able to produce more or less of a product due to changes of prices in the market.

28. b. Inelastic: Suppliers will not be able to produce more or less of a product.

30. 1. Fixed Costs : Same monthly.

31. 2. Variable Costs: Varies monthly.

32. 3. Fixed + Variable = Total

33. 4. Adding labor (more workers is not always good):

34. a. At first, each additional worker increases output more. (Increasing Marginal Returns)

35. b. Eventually output will still increase, but more slowly. (Diminishing marginal returns).

36. c. Soon, production will drop with each worker added. (Negative marginal returns).

38. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Monopoly Monopolistic Competition Oligopoly

39. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many Monopoly Monopolistic Competition Oligopoly

40. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical Monopoly Monopolistic Competition Oligopoly

41. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start Monopoly Monopolistic Competition Oligopoly

42. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Monopoly Monopolistic Competition Oligopoly

43. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly Monopolistic Competition Oligopoly

44. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly One Monopolistic Competition Oligopoly

45. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly One Unique Good Monopolistic Competition Oligopoly

46. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly One Unique Good Difficult To Start &Hold Monopolistic Competition Oligopoly

47. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly One Unique Good Difficult To Start &Hold Full Control Monopolistic Competition Oligopoly

48. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly One Unique Good Difficult To Start &Hold Full Control City Sewage Monopolistic Competition Oligopoly

49. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly One Unique Good Difficult To Start &Hold Full Control City Sewage Monopolistic Competition Many Oligopoly

50. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly One Unique Good Difficult To Start &Hold Full Control City Sewage Monopolistic Competition Many Similar, Sub- stitutes Oligopoly

51. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly One Unique Good Difficult To Start &Hold Full Control City Sewage Monopolistic Competition Many Similar, Sub- stitutes Few Oligopoly

52. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly One Unique Good Difficult To Start &Hold Full Control City Sewage Monopolistic Competition Many Similar, Sub- stitutes Few Some Oligopoly

53. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly One Unique Good Difficult To Start &Hold Full Control City Sewage Monopolistic Competition Many Similar, Sub- stitutes Few Some Clothing, Barbers Oligopoly

54. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly One Unique Good Difficult To Start &Hold Full Control City Sewage Monopolistic Competition Many Similar, Sub- stitutes Few Some Clothing, Barbers Oligopoly Few

55. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly One Unique Good Difficult To Start &Hold Full Control City Sewage Monopolistic Competition Many Similar, Sub- stitutes Few Some Clothing, Barbers Oligopoly Few Similar, Sub- stitutes

56. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly One Unique Good Difficult To Start &Hold Full Control City Sewage Monopolistic Competition Many Similar, Sub- stitutes Few Some Clothing, Barbers Oligopoly Few Similar, Sub- stitutes Many, Ex- pensive

57. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly One Unique Good Difficult To Start &Hold Full Control City Sewage Monopolistic Competition Many Similar, Sub- stitutes Few Some Clothing, Barbers Oligopoly Few Similar, Sub- stitutes Many, Ex- pensive Some

58. Business Organization Number of Firms Variety of Goods Barriers to Entry Control Over Prices Example Perfect Competition Many None, Identical None, Easy to start None, Supply & Demand Farms, Stocks Monopoly One Unique Good Difficult To Start &Hold Full Control City Sewage Monopolistic Competition Many Similar, Sub- stitutes Few Some Clothing, Barbers Oligopoly Few Similar, Sub- stitutes Many, Ex- pensive Some Auto, Cereal