Download Supply and its functions

Demand and its Functions
Handout 20
1. It is downward sloping from left to right
2. 15:5
3. A demand schedule
4. Demand schedule is a chart showing how much of an
item will be bought at different prices
5. Quantity demanded is the amount of items that will be
bought at a particular price
6. Demand is something desired; quanitity demanded is
what is wanted at X price
7. When the price goes up, the quantity demanded goes
down; when the price goes down, the quantity demanded
goes up
8. Price goes up; demand goes down; price goes down;
demand goes up
Handout 21
1. A complementary factor caused the change. The tape
player price decreased so the quantity of tapes sold
increased. D2 increased
2. A substitution factor caused the change; the introduction
of the portable compact disc player; and a change in
consumer tastes- people wanted the latest ‘hot’ item on the
market. D3 decreased
3. Taste & income
4. The expectation of future prices to drop so the product
can be bought later; changer consumer tastes; income
reduced.
Handout 22
1. Demand was inelastic because the US bought about the
same amount of oil.
2. There was a lack of oil substitutions and no other major
oil suppliers.
3. Energy conservation; the discovery o new oil supplies in
Mexico, England’s North Sea, etc.; and the greater use of
substitutes such as gasohol, solar energy and co9al brought
down the price.
4. In the long run, people can adapt to conditions by finding
more supplies, substitutes, building refineries, etc…
Handout 23
a. many substitutes
b. small portion of budget – not many substitutes –
c. many substitutes
d. few substitutes
e. brain surgery is usually a necessity
a. 4- competing gas stations: if one raises the price of
gasoline, and the other doesn’t, the response will be elastic
b. 3-salt: Regardless of the change in price, the quantity of
salt demanded will be the same
c. 2-wheat: If one farmer raises the price of wheat, that
farmer probably will lose most if not all sales because there
are so many farmers in the country.
d. 1- oil: When OPEC raised oil dramatically; the quantity
demanded did not go down very much.
Supply and its functions:
Handout 24
1. Upward sloping
2. A direct relationship – as the price rises, so does the
quantity supplied.
3. As a direct relationship between prices and quantities
supplied
4. They both have a price column. They both represent a
commodity to be sold for a specific period of time. The
demand curve is downward sloping while the supply curve
is upward sloping.
5. The quantity supplied is a given amount offered for sale
at a particular price.
6. A change in quantity supplied
7. Supply is the amount of goods a producer4 puts on the
market. Supply is shown as a schedule or curve of the
quantities supplied at various prices during a specific
period of time.
Handout 25
1. Month B’s supply curve S2 is left of the baseline S1.
No, Tom was unhappy because the supply was decreased
due to the work stoppage.
2. Month C’s supply curve S3 is right of the baseline S1.
Yes this is good for Tom because the supply was increased
due to the increase in T-shirts available for supply.
Handout 26
1. producer P
5. market M
2. market M
3. other factors F
5. other factors F