Transcript Demand and Supply Review (Chp. 4)

Demand and Supply Review (Chp. 4)
What is the demand for a product?
What is the supply of a product?
What are the slopes of each?
What is the relationship between the price and
the quantity demanded and supplied?
What is the difference between a change in the
quantity demanded and a change in demand?
Demand and Supply Review (Chp. 4)
Can you recall some factors that shift demand?
• Prices of related goods
• Income
• Preferences
• Expectations
How do you explain/interpret the shift?
Demand and Supply Review (Chp. 4)
Can you recall some factors shifting supply?
• The price of related goods
• Productivity
• Cost of inputs
Demand and Supply Review (Chp. 4)
What is meant by equilibrium?
What is meant by a shortage
vs surplus in the market?
Can you describe how the
market transitions to
equilibrium when there is a
surplus?
Demand and Supply Review (Chp. 4)
What are price rigidities?
What is a price floor vs price ceiling?
Does a price ceiling create a shortage or a
surplus in the market?
Examples
1) In the market for stocks
i) Analyze what happens if people expect them to have a
higher price next year?
State which side of the market is impacted, and how the
economy transitions to the new equilibrium.
2)You operate a burger house producing beef and chicken
burgers.
The selling price of chicken burgers has increased. Analyze the
impact on the beef market. Clearly state your assumptions.