Econ 201 1st Edition Lecture 11Outline of Last Lecture 1.supply and demand in marketOutline of Current Lecture 1. Supply and Demand BasicCurrent LectureDemand: The Market Behavior of BuyersQd = quantity demanded = amount of a good buyers are able and willing to buy each time period.What influences this? What are the determining variables?Mainly: price (P), income (M), prices of other goods (Px, Py), tastes (T),expectations of buyers (Eb), and the number of buyers (Nb) RelationshipDemand is the relationship between Qd and these other variables: Qd = f(P; IM Px, Py, T, Eb, Nb2Focus on the P determinant with other variables held constant (Ceteris Paribus): Qd = f(P)Law of Demand: Qd is larger when P is smaller, ceteris paribus. A negative relationship.ChangesDistinguish a change in quantity demanded (Qd) from a change in demand (the relationship).i.e. movement along the demand curve vs. shift of the curve.If the other variables change, the relationship between Qd and P changes.These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.The demand curve shifts.Supply: The Market Behavior of SellersQs = quantity supplied = amount of a good sellers are willing to sell each time period.What influences this? What are the determining variables?Mainly: price (P), prices of inputs (W), technology of production (τ), expectations of sellers (Es), and the number of sellers (Ns)RelationshipSupply is the relationship between Qs and these other variables: Qs = h(P; W, τ, Es, Ns)Focus on the P determinant with other variables held constant (Ceteris Paribus): Qs = h(P) Law of Supply: Qs is larger when P is larger, ceteris paribus. A positive relationship.ChangesDistinguish a change in quantity supplied (Qs) from a change in supply (the relationship). i.e. movement along the supply curve vs. shift of the curve.3If the other variables change, the relationship between Qs and P changes. The supply curve
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