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Homework #3
Chapter 2
Question 1: Daniel Wonderly
Question 5: James Washington
Question 12: Ashlea Ward
Question 17: Katia Trujillo
Working with Graphs and Numbers:
Question 1: Johanna Trujillo
Question 2: Ty Treece
Question 5: Melissa Steele
Alternates: Jermaine Spence and Arturo Soliz
Homework #3
Chapter 2
Question 1: Shelly Arner
Question 5: Albert Depalma
Question 12: Yazan Hawatmeh
Question 17: Jesus Herrera
Working with Graphs and Numbers:
Question 1: Kevin Jenkins
Question 2: Kelsey Jones
Question 5: Sophie Laureano
Alternates: Marisa Navarro and Daniela Rosales
In-class exercise 3
Do we understand Chapter 2?
Chapter 3
Supply, Demand,
and Price
Market
• Market is an arrangement by which people
exchange goods and services including
money
• Two sides
– Buyer
– Seller
Starting with the Buyer Side
• Quantity demanded
– Amount of a good people are willing and able
to buy at a particular price at a particular point
in time
Important parts of definition
•
•
•
•
Willing
Able
Particular Price
Particular point in time
Demand
Quantity demanded over all prices during a
specific point in time
• Important parts:
• Quantity demanded
• All prices
• Specific point in time
So….
So….
Who does what in the
Market?
• Consumers
– Buy goods
– Sell Labor
• Firms
– Sell goods
– Buy Labor
Circular Flow
• Depiction of how the market works in the
economy
• Includes both buyers and sellers
• Shows the flow of goods and services
between consumers and firms
Law of Demand
• As price of a good (decreases) increases
the Quantity demanded of that good
(increases) decreases
Demand Schedule
• Numerical table of quantity demanded
at different prices
Price
4
3
2
1
Quantity
10
20
30
40
Demand Curve
• Graphical representation of the demand
schedule
• Used to represent the relationship
between price and quantity
• Why type of relationship do you expect
price and quantity to have?
Demand Schedule and Demand
Curve
DEMAND S CHEDULE FOR GOOD X
Pric e (do llars )
PRICE
(do llars )
QUANTITY
DEMANDED
POINT IN
PANEL (b)
4
10
A
3
3
20
B
2
2
30
C
1
40
D
4
A
De mand Curve
B
C
D
1
0
10
20
30
40
Quantity De mande d o f Go o dX
(a)
(b)
Market Demand
Curves
• Previous demand
curve was for an
individual
– Single buyer
• How can we get the market curve from
individual demand curves?
– All buyers
• Sum the individual Demand curves…
Therefore….
Deriving a Market Demand
Schedule & Curve
Part (a)
QUANTITY DEMANDED
PRICE
JONES
S MITH
OTHER BUYERS ALL BUYERS
$15
1
2
20
23
14
2
3
45
50
13
3
4
70
77
12
4
5
100
109
11
5
6
130
141
10
6
7
160
173
Part (b)
Pric e ($)
12
11
0
De mand Curve
(Jo ne s )
A1
B1
12
11
+
4 5
Quantity Demande d
Pric e ($)
+
Pric e ($)
12
11
0
De mand Curve
(o the r buye rs )
A3
B3
0
100 130
Quantity De manded
=
De mand Curve
(S mith)
A2
B2
5 6
Quantity De mande d
Pric e ($)
12
11
Deriving a
Market
Demand
Schedule
& Curve
Marke t De mand
Curve
A4
B4
0
109 141
4 + 5 + 100
Quantity De mande d
5 + 6 + 130
Determinates of Demand
• Income
– Normal good
– Inferior good
• Preferences
• Prices of Related Goods
– Substitutes
– Compliments
Determinates Continued…
• Number of Buyers
• Expectations of Future