1 31 2024 Demand Supply and Equilibrium The Circle Flow Model Private Closed economy Zero International Trade No trading No Outsourcing Households Businesses Sole Proprietorship One Owner Most Popular Partnership Two or More Owners Highest Failure Rate Corporation Whoever Owns Stock Most Profitable Product Market and the Research Market The real flow and the money flow Markets Interaction between buyers and sellers Markets May be Local National Internatioonal Price is discovered in the interactions between buyers and sellers Demand A schedule or curve shows the various amounts of a product that consumers are willing and able to purchase at each possible price during specified periods Demand Schedule Tables or demand curve graph The amount that consumers are willing and able to purchase at a given price assuming Other things equal Individual demand Market Demand Law Of Demand Law of demand Other things equal as the price falls the quantity demanded rises and as the price rises the quantity demanded falls Inverse relationship Price acts as an obstacle to buyers Law of diminishing marginal utility once a consumer has enough quantity the desire to buy goes down Income and substitution effect as Income goes up the demand for goods and services goes right or is increased Substitution effect Replace one good with another good Example apples are cheaper so you buy more apples and fewer oranges Demand curve Quantity change is a shift along the curve The shift in demand is when the entire curve shifts left or right Left is a decrease in demand and right is an increase in demand The determinants of demand 1 2 Determinants of demand Change in consumer tastes and preferences Change in the number of buyers Change in income Normal goods as your income goes up you buy more Inferior goods as your income goes up you buy less The determinants of demand 2 2 Change in prices of related goods Complementary goods peanut butter and jelly Substitute goods Xbox and Playstation Change in consumer expectations Future prices Future income Do the determinants of changes along the curve shift the curve they shift the curve
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