Microeconomics CH 4

Willingness and ability to buy. Quantity varies inversely to Price.

• Quantity demanded rises as price falls, other things constant
• or
• Quantity demanded falls as price rises, other things constant

The graphic representation of the relationship between price and quantity demanded. As price goes up Demand goes down.

Refers to a schedule of quantities of a good that will be bought per unit of time at various prices, other things constant.

Refers to a specific amount that will be demanded per unit of time at a specific price other things constant.

the graphical representation of the effect of a change in price on the quantity demanded.

the graphical representation of the effect of anything other than price on demand.

• 1. Society's income.
• 2. The prices of other goods.
• 3. Tastes.
• 4. Expectations.
• 5. Taxes on and subsidies to consumers.

Rise in demand. more money more nice stuff.

When price of a good declines, the demand for its compliment increases.

Rockshows or TV

If you expect the price to fall you may post pone purchasing until later.

• Taxes cause a decrease in demand for goods with tax.
• Subsidies cause an increase in demand by giving a tax holiday, or other.

Is the horizontal sum of all individual demand curves.

• 1. At lower prices, existing demanders buy more.
• 2. At lower prices, new demanders enter the market.

• Quantity supplied rises as price rises, other things constant.
• or
• Quantity supplied falls as price falls, other things constant.

The graphical representation of the relationship between price and quantity supplied. As one increases the other increases.

Refers to a schedule of quantities a seller is willing to sell per unit of time at various prices, other things constant.

Refers to a specific amount that will be supplied at a specific price.

The graphical representation of the effect of a change in price on the quantity supplied.

the graphical representation of the effect of a change in a factor other than price on supply.

• 1. Price of Inputs
• 2. Technology
• 3. Expectations
• 4. Taxes and Subsidies

Supply falls when price of inputs rises. If costs rise substantially a firm might even shut down.

Advances in Technology increase supply.

Expectations can increase or decrease supply depending. If prices expected to be higher later. Supplier may take some product off the shelf for sale later. Decreasing supply now and increasing it later.

• Taxes on suppliers reduces supply
• Subsidies increase supply.