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September 23, 2013

September 23, 2013. Begin Unit 2: Product Markets Unit 1 Exam Results & Review. AP Microeconomics Unit 2 Chapters 3-6 Exam: 10/17 & 10/18. The Nature and Function of Product Markets. Chapter3. Demand, Supply, and Market Equilibrium. Markets.

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September 23, 2013

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  1. September 23, 2013 • Begin Unit 2: Product Markets • Unit 1 Exam Results & Review

  2. AP Microeconomics Unit 2Chapters 3-6Exam: 10/17 & 10/18 The Nature and Function of Product Markets

  3. Chapter3 Demand, Supply, and Market Equilibrium

  4. Markets • Interaction between buyers (Demand) and sellers (Supply) • Markets may be: • Local • National • International • Price is discovered in the interactions of buyers and sellers. 3-4 LO1

  5. Demand • Displayed as Schedule or Curve • Amount consumers are willing and able to purchase at a given price during specific period of time. • Other things equal • Individual demand • Market demand 3-5 LO1

  6. The Demand Curve The Demand Curve 6 5 4 3 2 1 0 Price (per bushel of corn) 10 20 30 40 50 60 70 80 Quantity Demanded (bushels of corn per week) Note: Price Vertical, Quantity Horizontal. Inverse Relationship P Individual Demand P Qd 10 20 35 55 80 $5 4 3 2 1 D Q So which of these points actually exists in society? 3-6 LO1

  7. Law of Demand • OTHER THINGS EQUAL… • As price falls, the quantity demanded rises, and as price rises, the quantity demanded falls. • 4 Reasons: • Common sense • Law of diminishing marginal utility • Income effect (the lower the price, the greater the purchasing power of the consumer) • Substitution effect (lower the price = buyer incentive) • Downward slope on graph reflects Law of Demand. 3-7 LO1

  8. September 24, 2013 • The Demand Curve, Change in Demand, Change in Quantity Demanded. Upcoming Unit 2 Quiz Dates • Monday, 9/30: Chapter 3 (Supply, Demand, Equilibrium) • Friday, 10/4: Chapter 4 (Elasticity) • Thursday, 10/10: Chapter 5 (Market Failure) • Tuesday, 10,15: Chapter 6 (Consumer Behavior)

  9. From Individual to Market Demand 3-9 LO1

  10. Determinants of Demand“Demand Shifters” • Price is the most important factor in determining demand UNLESS the “all other things equal” changes… • Consumer Tastes • # of buyers in the market • Consumer incomes (normal and inferior goods) • Price of related goods (substitute and complementary) • Consumer expectations

  11. Change in Quantity Demanded • A change in QUANTITY DEMANDED along a fixed demand curve is the result of PRICE! (Movement from one point to another along curve.)

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