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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


Change in demand

What could change this graph? Demanded Decreases Example Candy Auction

Change in Demand


Elasticity of demand what makes the slope of the line change

  • Elastic Demanded Decreases Example Candy Auction

  • 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?


The law of supply
The Law of Supply Demanded Decreases Example Candy Auction

P

QS


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? supplied also increases P Q

  • Equilibrium QD & QS Intersect at the Same Price 

    . Equilibrium point


Price controls government involvement
Price Controls =Government Involvement supplied also increases P Q

  • Price Floor = price set above Equilibrium

    Surplus

    Shortage

    Price Ceiling = Price set below Equilibrium


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