Download 1999 South-Western College Publishing

Principles of Economics
2nd edition
by Fred M Gottheil
PowerPoint Slides prepared by Ken Long
©1999 South-Western College Publishing
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Chapter 3
Demand & Supply
©1999 South-Western College Publishing
5/12/20
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This chapter discusses
principles associated with
Market-Day
Short
Individual
- -Run
Demand
Supply
Supply
Equilibrium
Long
Run
Quantity
Supply
Equilibrium
Market
Demand
Price
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What assumption is
made when a change in
quantity is related to a
price change?
Ceteris paribus
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What is the Law of
Demand?
When price increases the
quantity demanded
decreases
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What is a
Demand Schedule?
Shows the specific
quantity of a good or
service that people are
willing and able to buy at
different prices
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Price Quantity Demanded
$10
0
$9
1
$8
2
$7
3
$6
4
$5
5
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What is a
Demand Curve?
Depicts the relationship
between price and
quantity demanded
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P1
P2
Q1
Q2
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What is Market Demand?
The sum of all individual
demands in a market
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What is a
Supply Schedule?
Shows the specific quantity
of a good or service that
suppliers are willing and
able to provide at
different prices
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Price Quantity Supplied
$5
0
$6
1
$7
2
$8
3
$9
4
$10
5
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What is a Supply Curve?
Depicts the relationship
between price and
quantity supplied
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P2
S
P1
Q1
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Q2
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What is
Market-Day Supply?
A market situation in
which the quantity of a
good supplied is fixed,
regardless of price
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P2
S
P1
Q
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P
D
S
Excess Supply
Excess Demand
Q
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What is
Equilibrium Price?
The price that equates the
quantity demanded and
the quantity supplied
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P1
Surplus
S
P3
P2
Shortage
Q3
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What is the Short run?
The time interval during
which suppliers are able
to change the quantity of
some but not all the
resources used
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What is the Long run?
The time interval during
which suppliers are able
to change the quantity of
all resources used
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What is a change in
Demand?
A change in the quantity
demanded of a good
that is caused by factors
other than a change in
the price of that good
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P
Shift in Demand Curve
D2
D1
Q
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Decrease in Demand
S1
P1
P2
D2
Q2
D1
Q1
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Increase in Demand
S
P2
P1
D2
D1
Q1
Q2
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What causes a shift
in Demand?
Price
of
a
related
good
or
Change
in
population
size
Expectations
Changes
Incomes
in
change
tastes
change
service changes
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NOTE - KNOW THE
DIFFERENCE
BETWEEN A CHANGE
IN THE QUANTITY
DEMANDED AND A
CHANGE IN DEMAND
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What is a change
in Supply?
A change in the quantity
supplied of a good that
is caused by factors
other than a change in
the price of that good
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P
Shift in Supply
S1
S2
Q
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Increase in Supply
S1
P1
P2
S2
D
Q1
Q2
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0
Decrease in Supply
S2
P2
P1
S1
D
Q2
Q1
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What causes a shift
in Supply?
Change
inother
number
of
Prices
of
goods
Expectations
change
Change
in resource
prices
Technology
change
suppliers
change
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NOTE - KNOW THE
DIFFERENCE
BETWEEN A CHANGE
IN THE QUANTITY
SUPPLIED AND A
CHANGE IN SUPPLY
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What is the sales
message in this site?
http://www.razzledazzle.com
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• What assumption is always made
when the price changes?
• What is a Demand Curve?
• What is a Supply Curve?
• What is equilibrium Price?
• What is the Short run?
• What is the Long run?
• Long run or Short run?
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END
©1999 South-Western College Publishing
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