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Demand and Supply. Revisited Along with elasticity, shifters, equilibrium & disequilibrium. The Law of Demand. P. QD. As the Price for a good or service increases, the Quantity Demanded Decreases Example Candy Auction. All of the Prices paired with the Quantities Demanded = Demand

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demand and supply

Demand and Supply

Revisited

Along with elasticity, shifters, equilibrium & disequilibrium

as the price for a good or service increases the quantity demanded decreases example candy auction
As the Price for a good or service increases, the Quantity Demanded Decreases Example Candy Auction
  • All of the Prices paired with the Quantities Demanded = Demand
  • Price can only indicate a change in the quantity demanded– It cannot change Demand
  • Only Six (6)things can change Demand
  • ▲ Income, ▲Population, ▲Tastes & Preferences
  • ▲Consumer Expectations, ▲Price of Substitutes
  • ▲Price of Complements
elasticity of demand what makes the slope of the line change

Elastic

  • Inelastic
  • How sensitive to a change in price is the change in the quantity demanded?
Elasticity of Demand: What Makes the Slope of the Line change?
as the price for a good or service increases the quantity supplied also increases p q
As the price for a good or service increases, the quantity supplied also increases P Q
  • All of the Prices paired with the Quantities Supplied = Supply
  • Price can only indicate a change in the quantity supplied– It cannot change Supply
  • Only Six (6) things can change Supply
  • ▲ Cost of Inputs, ▲# of Producers,
  • ▲Producer Expectations, ▲Technology
  • ▲Government Policy, ▲Natural Events/Disasters
how do you know when the price is right
How do you Know when the Price is Right?
  • Equilibrium QD & QS Intersect at the Same Price 

. Equilibrium point

price controls government involvement
Price Controls =Government Involvement
  • Price Floor = price set above Equilibrium

Surplus

Shortage

Price Ceiling = Price set below Equilibrium

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