Chapter 3: Demand and Supply
3.1 Demand
Definition and Law of Demand: Explains how quantity demanded
varies inversely with price.
Demand Curve and Schedule: Visual and tabular representation
of the relationship between price and quantity demanded.
Determinants of Demand: Factors like income, tastes, prices of
related goods (substitutes and complements), expectations, and
number of buyers that shift the demand curve.
Movement vs. Shift: Distinguishing between movements along
the demand curve (changes in quantity demanded due to price
changes) and shifts in the demand curve (changes in demand due
to other factors).
3.2 Supply
Definition and Law of Supply: Describes the direct relationship
between price and quantity supplied.
Supply Curve and Schedule: Graphical and tabular depiction
showing how quantity supplied changes with price.
Determinants of Supply: Factors such as production costs,
technological advancements, prices of inputs, expectations, and
number of sellers that can shift the supply curve.
Movement vs. Shift: Differentiates movements along the supply
curve (changes in quantity supplied due to price changes) from
shifts in the supply curve (changes in supply for reasons other than
price).
3.3 Market Equilibrium
Equilibrium Price and Quantity: The price and quantity at which
the quantity demanded equals the quantity supplied.
Surpluses and Shortages: Explains the adjustments that occur
when there is a surplus (quantity supplied exceeds quantity
demanded) or a shortage (quantity demanded exceeds quantity
supplied).
Changes in Equilibrium: How shifts in demand and/or supply
affect the equilibrium price and quantity.
3.4 Review and Practice
Applying Concepts: Practice problems and examples to apply the
concepts of demand, supply, and market equilibrium.
Real-World Applications: Discussion of how demand and supply
principles apply to real-world markets, including policy implications
and current economic events.
