supply and demand chapter 3. competitive market lots of buyers and sellers dealing in identical...
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Supply and Demand
Chapter 3
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Competitive Market
Lots of buyers and sellers dealing in identical goods.
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Catherine’s Demand Curve
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Market Demand as the Sum of Individual Demands
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Shifts in the Demand Curve
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Shift Factors for Demand
1. Income.
2. Prices of related goods (substitutes and complements).
3. Tastes/Preferences.
4. Expectations.
5. Number of buyers.
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Shifts in the Demand Curve versus Movements along the Demand Curve
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Market Supply as the Sum of Individual Supplies
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Market Supply as the Sum of Individual Supplies
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Shifts in the Supply Curve
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Shift Factors for Supply
1. Input prices.
2. Technology.
3. Weather.
4. Expectations.
5. Number of sellers.
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The Equilibrium of Supply and Demand
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Markets Not in Equilibrium
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A Three-Step Program for Analyzing Changes in Equilibrium
1. Decide whether the event shifts the supply or demand curve (or perhaps both).
2. Decide in which direction the curve shifts.
3. Use the supply-and-demand to see how the shift changes the equilibrium price and quantity.
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How an Increase in Demand Affects the Equilibrium
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How a Decrease in Supply Affects the Equilibrium
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A Shift in Both Supply and Demand