Download Module Supply and Demand: Introduction and Demand

Module 5
Supply and Demand:
Introduction and Demand
KRUGMAN'S
MACROECONOMICS for AP*
Margaret Ray and David Anderson
What you will learn
in this Module:
• What a competitive market is and how it is
described by the supply and demand
model
• What the demand curve is
• The difference between movements along
the demand curve and changes in
demand
• The factors that shift the demand curve
Supply and Demand: A Model of a
Competitive Market
• Competitive Market
• Supply and Demand Model
i
The Demand Curve
• Demand schedule
• Quantity demanded
• Demand curve
• Law of Demand
Demand Schedule and
Demand Curve
Price
Quantity
Price
Quantity
$8
3
$7
5
$6
7
$5
10
$4
12
$3
16
$2
22
Understanding Shifts of the
Demand Curve
• Increase = right, Decrease = left
• M.E.R.I.T. shifts demand
• market size (number of consumers)
• expectations
• related prices (complements, substitutes)
• income (normal, inferior)
• tastes
Figure 5.1 The Demand Schedule and the Demand Curve
Ray and Anderson: Krugman’s Economics for AP, First Edition
Copyright © 2011 by Worth Publishers
Figure 5.2 An Increase in Demand
Ray and Anderson: Krugman’s Economics for AP, First Edition
Copyright © 2011 by Worth Publishers
Figure 5.3 A Movement Along the Demand Curve Versus a Shift of the Demand Curve
Ray and Anderson: Krugman’s Economics for AP, First Edition
Copyright © 2011 by Worth Publishers
Figure 5.4 Shifts of the Demand Curve
Ray and Anderson: Krugman’s Economics for AP, First Edition
Copyright © 2011 by Worth Publishers
Figure 5.5 Individual Demand Curves and the Market
Demand Curve
Ray and Anderson: Krugman’s Economics for AP, First Edition
Copyright © 2011 by Worth Publishers
Table 5.1 Factors That Shift Demand
Ray and Anderson: Krugman’s Economics for AP, First Edition
Copyright © 2011 by Worth Publishers