1、Chapter 3,The Supply and Demand,Demand, Supply Market equilibrium,Markets,A market is a group of buyers and sellers of a particular good or service. The terms supply and demand refer to the behavior of people . . . as they interact with one another in markets.,What is market? A place where exchanges
2、 happen,The Market Forces of Supply and Demand,Supply and demand are the two words that economists use most often. Supply and demand are the forces that make market economies work. Modern microeconomics is about demand, supply, and market equilibrium.,Today:,Demand, Supply Market equilibrium,Demand,
3、Quantity demanded is the amount of a good that buyers are willing and able to purchase. Willing : Able：,Factors that have influence on Demand,1.Price of the goods,2.Consumers Preferences,Changes in consumers preferences or tastes for a product (relative to another product) will change the amount the
4、y purchase at a given price.Example: After September 11, 2001, more consumers were afraid to fly, resulting in a decrease in the demand for air travel. The demand for gasoline increased, as people chose to drive more to different destinations.,911 tragedy,3.Consumers Information,New information avai
5、lable to consumers can result in a change in the quantity that consumers buy of a good, even though the price does not change. Examples: Milk powder in china Car owners bought less Firestone tires once they learned of the mass recall of Firestone tires. Demand for Krispy Kreme doughnuts declined whe
6、n people got information that eating less carbohydrates can facilitate weight loss (a.k.a., the Atkins Diet).,Normal Goods: goods for which demand increases when the consumers income rises and decreases when consumers income falls.Examples: Jewelry Luxury cars,4.Consumers Incomes,5.Number of Consume
7、rs in the Market,More consumers in the market will likely result in a larger demand for the good or service, while fewer consumers will likely result in a smaller demand for the good or service.Example: The demand for electricity in your city increases as the population of the city increases.,Expect
8、ations of higher future prices will increase demand now. Expectations of lower future prices will decrease demand now.Example: Expectations of higher prices of gasoline in the future tends to make individuals fill up now.,6.Consumers Expectation of Future Prices,Substitute: a good that has many of t
9、he same characteristics as and can be used in place of another good. Examples: Coke is a substitute for Pepsi. Riding a car is a substitute for taking the bus. Downloaded music is a substitute for music CDs. Complement: a good that is consumed or used together with another good. Examples: Gasoline i
10、s a complement to cars. Cream is a complement to coffee.,7.Prices of Closely Related Goods,Prices of Closely Related Goods,If two goods are complements, then an increase in the price of one good will result in a decrease in the demand for the other good.If two goods are substitutes, then an increase
11、 in the price of one good will result in an increase in the demand for the other good.,Factors that have influence on demand,1.Price of the goods 2.Consumers Preferences 3.Consumers Information 4.Consumers Incomes 5.Number of Consumers in the Market 6.Consumers Expectation of Future Prices 7.Prices
12、of Closely Related Goods -,Which one is the most important?,Demand,Demand: a relationship between price and the quantity demanded, all else being equal.Price: the amount of money or other goods that one must pay to obtain a particular good.Quantity Demanded（Qd）: the quantity of a good that people wa
13、nt to buy at a given price during a specific time period.,Demand Schedule,The demand schedule is a table that shows the relationship between the price of the good and the quantity demanded.,Catherines Demand Schedule,The Demand Curve,Demand Curve: a graph of demand showing the downward-sloping relat
14、ionship between price and quantity demanded.,Figure 1 Catherines Demand Schedule and Demand Curve,Price of,Ice-Cream Cone,0,2.50,2.00,1.50,1.00,0.50,1,2,3,4,5,6,7,8,9,10,11,Quantity of,Ice-Cream Cones,$3.00,12,Figure 1: The Demand Curve,22,ways to express demand,Q = f（P）=124P,需求表,需求曲线,需求函数,The Law o
15、f Demand,The Law of Demand: the tendency for the quantity demanded of a good to decline as its price rises. Note: For a demand curve to be consistent with the Law of Demand, the demand curve must be downward sloping.,The Law of Demand,According to the law of demand, a lower price will result in an i
16、ncrease in the quantity of the good that consumers are willing to buy, holding all else constant.,A lower price,Leads to a higher quantity demanded,all else being equal.,Law of Demand: an example,In 2008, General Motors (GM) offered “employee pricing” deals for its cars and trucks to increase vehicl
17、e sales. Calculation by the Consumer Reports estimated this to be a 13 percent decrease in the price of the vehicle.,The Ceteris Paribus Assumption,Ceteris Paribus: “all other things equal”; refers to holding all other variables constant or keeping all other things the same when one variable is chan
18、ged.,all else being equal.,Market Demand versus Individual Demand,Market demand refers to the sum of all individual demands for a particular good or service. Graphically, individual demand curves are summed horizontally to obtain the market demand curve.,28,一种商品的行业需求(市场)等于所有的个人需求之和。,O,O,O,P($),P($),
19、P($),Q,Q,Q,D1,D1,15,10,4,5,D2,D2,15,10,2,8,15,10,6,13,DM,DM,Market Demand versus Individual Demand,Change in Quantity Demanded versus Change in Demand（Change in Demand）,0,D,Price of Ice-Cream Cones,Quantity of Ice-Cream Cones,A tax that raises the price of ice-cream cones results in a movement along
20、 the demand curve.,A,8,1.00,Changes in Quantity Demanded,Change in Quantity Demanded,Movement along the demand curve. Caused by a change in the price of the product.,Shifts in the Demand Curve,Consumer income Prices of related goods Tastes Expectations Number of buyers,Shifts in the Demand Curve,Cha
21、nge in Demand A shift in the demand curve, either to the left or right. Caused by a change in a determinant other than the price.,Tastes,Shifts in the Demand Curve,0,D1,Price of Ice-Cream Cone,Quantity of Ice-Cream Cones,D3,D2,Increase in demand,Decrease in demand,Tastes,Shifts in Demand,Changes in
22、the following can cause the demand curve to shift to the left or to the right: Consumers Preferences Consumers Information Consumers Income Number of Consumers in the Market Consumers Expectations of Future Prices Prices of Closely Related Goods a) Substitutes b) Complements,Figure 2: A Shift in the
23、 Demand Curve,Figure 3: Shifts of versus Movements Along the Demand Curve,Variables That Influence Buyers,Quantity Supplied:is the amount of a good that sellers are willing and able to sell.,Supply,Factors that have influence on supply,1.Price of the goods,2.Technology,Anything that changes the amou
24、nt that a firm can produce with a given amount of inputs can be considered as a change in technology. Improvements in technology will correspond to an increase in supply.Example: Innovations that decrease the time it takes to produce cars.,3.Weather Conditions,Droughts, earthquakes, and hurricanes a
25、ffect how much of certain goods can be produced.Examples: Unusually cold winter in California decreased citrus production. Hurricane Katrina and Rita decreased oil production in Louisiana and Texas.,More expensive inputs (raw materials, land, and capital) increases the cost of production of goods an
26、d services and may force the firm to sell less at a given price.Example: Higher steel prices in 2002 decreased the production of household appliances.,4.The Price of Inputs Used in Production,5.The Number of Firms in the Market,If the number of firms in the market increases, the supply curve shifts
27、to the right.If the number of firms in the market decreases, the supply curve shifts to the left.,Expectations of lower selling prices in the future will increase the supply today as firms decide to sell less in the future when prices are lower. Similarly, expectations of higher selling prices in th
28、e future will decrease the supply today as firms decide to sell more in the future when prices are higher.,6.Expectations of Future Prices,An increases in taxes (payments by firms to the government) or a decrease in subsidies (payment by the government to firms) will decrease supply. A decrease in t
29、axes or an increase in the subsidies will increase supply.,7.Government Taxes, Subsidies, and Regulations,Government Taxes, Subsidies, and Regulations,Regulations: government policies or rules that control a firms behavior. These regulations can affect a firms cost of production and thereby affect s
30、upply.Example: Government requirements that food vendors pass sanitary inspection will reduce the number of vendors and decrease supply.,Law of Supply 供给规律,The law of supply states that there is a direct (positive) relationship between price and quantity supplied.Supply: a relationship between price
31、 and the quantity supplied, all other things equal.,Supply,Supply Schedule: a tabular representation of the supply curve.,Supply Schedule 供给表,The supply schedule is a table that shows the relationship between the price of the good and the quantity supplied.,Bens Supply Schedule 供给表,Supply Curve 供给曲线
32、,The supply curve is the upward-sloping line relating price to quantity supplied.,Figure 5 Bens Supply Schedule and Supply Curve,rice of,Ice-Cream,Cone,0,2.50,2.00,1.50,1.00,1,2,3,4,5,6,7,8,9,10,11,Quantity of,Ice-Cream Cones,$3.00,12,0.50,The Supply Curve,Market Supply versus Individual Supply,Mark
33、et supply refers to the sum of all individual supplies for all sellers of a particular good or service. Graphically, individual supply curves are summed horizontally to obtain the market supply curve.,56,图:企业供给与行业供给,Change in Quantity Supplied versus Change in Supply,Change in Quantity Supplied,1,5,
34、Price of Ice-Cream Cone,Quantity of Ice-Cream Cones,0,S,1.00,A,C,A rise in the price of ice cream cones results in a movement along the supply curve.,Change in Quantity Supplied,Movement along the supply curve. Caused by a change in the market price of the product.,Shifts in the Supply Curve,Input p
35、rices Technology Expectations Number of producers,Shifts in the Supply Curve,Change in Supply A shift in the supply curve, either to the left or right. Caused by a change in a determinant other than price.,Shifts in the Supply Curve,Price of Ice-Cream Cone,Quantity of Ice-Cream Cones,0,S1,Table 2 Va
36、riables That Influence Sellers,63,Movement along the supply curve: occurs when a change in the quantity supplied of a good is brought along by a change in its price.A shift in the supply curve: occurs when a change is brought along by any source other than the price.,Shifts vs. Movement,Figure 6: Sh
37、ifts of versus Movements Along the Supply Curve,Figure 7: Overview of Supply and Demand,总结：供给的变化、供给量的变化,67,Market Equilibrium,Market equilibrium refers to a situation in which the price has reached the level where quantity supplied equals quantity demanded. Equilibrium price: the price at which the
38、quantity that sellers are willing to sell equals the quantity that consumers are willing to purchase.Equilibrium quantity: the quantity traded at the equilibrium price.,Supply and Demand Together,Demand Schedule,Supply Schedule,At $2.00, the quantity demanded is equal to the quantity supplied!,Marke
39、t Equilibrium,Copyright2003 Southwestern/Thomson Learning,Price of,Ice-Cream,Cone,0,1,2,3,4,5,6,7,8,9,10,11,12,Quantity of Ice-Cream Cones,13,Markets Not in Equilibrium,Price of,Ice-Cream,Cone,0,(a) Excess Supply,Quantity of,Ice-Cream,Cones,Equilibrium,Surplus When price equilibrium price, then quan
40、tity supplied quantity demanded. There is excess supply or a surplus. Suppliers will lower the price to increase sales, thereby moving toward equilibrium.,Equilibrium,Shortage When price the quantity supplied. There is excess demand or a shortage. Suppliers will raise the price due to too many buyer
41、s chasing too few goods, thereby moving toward equilibrium.,Figure 9 Markets Not in Equilibrium,Price of,Ice-Cream,Cone,0,Quantity of,Ice-Cream,Cones,(b) Excess Demand,Equilibrium :Law of supply and demand供求规律,The claim that the price of any good adjusts to bring the quantity supplied and the quanti
42、ty demanded for that good into balance.,76,需求-供给分析法,1通过绘制供给和需求曲线，不仅可以分析供给、需求与价格之间的关系，而且可以分析供需曲线背后诸多因素对价格和市场交易量的影响，这种分析方法称为需求-供给分析法。,Three Steps To Analyze Changes in Equilibrium,Decide whether the event shifts the supply or demand curve (or both) , or QS/QD. Decide whether the curve(s) shift(s) to t
43、he left or to the right. Use the supply-and-demand diagram to see how the shift affects equilibrium price and quantity.,78,2、分析均衡变动的三个步骤,当分析某个事件如何影响一个市场时，按三个步骤进行 1）which:确定该事件会移动供给曲线还是需求曲线(或者两者都移动) 还是供给量或者需求量2）how:确定移动的方向3） new Equilibrium:用供求图说明这种移动如何改变均衡,Shifts in Curves versus Movements along Cur
44、ves,A shift in the supply curve is called a change in supply. A movement along a fixed supply curve is called a change in quantity supplied. A shift in the demand curve is called a change in demand. A movement along a fixed demand curve is called a change in quantity demanded.,分析均衡的三个步骤,曲线移动与沿着曲线的移动
45、: 供给曲线的移动被称为供给的变化。 沿着固定的供给曲线的移动被称为供給量的变化。 需求曲线的移动被称为需求的变化。 沿着固定的需求曲线的移动被称为需求量的变化。,Event: An earthquake destroyed some u disk factories,How this event Affects the market? 3 steps:,1.Which,price,Not price,Qs Qd,The supply shift The demand shift,Decrease Increase,2.how,3.How a Decrease in Supply Affect
46、s the Equilibrium,P,2.00,0,1,2,3,4,7,8,9,11,12,Q,13,Demand,Initial equilibrium,S1,10,Event: An earthquake destroyed some u disk factory,New equilibrium,A decrease in supply will shift the supply curve to the left, resulting in a higher equilibrium price and a lower equilibrium quantity.,Event: the p
47、rice of steel is rising,Event:worker s salary is rising,An increase in supply will shift the supply curve to the right, resulting in a lower equilibrium price and a higher equilibrium quantity.,Event: new technologeleads to higher productivity,Effects of an Increase in Demand :An increase in demand
48、will shift the demand curve to the right, resulting in a higher equilibrium price and quantity.,Event: privte cars can only use 6 days per week.,Event: the 2nd ring road is being built,Effects of a Decrease in Demand: A decrease in demand will shift the demand curve to the left, resulting in a lower
49、 equilibrium price and quantity.,Event: Cars are cheaper and cheaper.,Event: Walking street,P80:What Happens to Price and Quantity When Supply or Demand Shifts?,Summary,Economists use the model of supply and demand to analyze competitive markets. In a competitive market, there are many buyers and sellers, each of whom has little or no influence on the market price.,
