Lecture 3 Supply

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Lecture 3 - Supply Demand

• Wissinks Words

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remarks

• Demand side of market
• Supply side of market
• Equilibrium prices and quantities
• The supply and demand model is the workhorse of
  economics.
• Consider supply and demand separately and then
  consider how they work together.

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demand concepts

• The demand function for XQD f(PX, Ps, Pc, I,
  TP, Pop)WherePX Xs pricePs the price
  of substitutesPc the price of
  complementsIincomeTPtastes and
  preferencesPoppopulation in market or market
  size

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• The demand function vs. demand
• The law of demand
• The demand curve - the picture
• movements along demand vs. shifts in demand

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supply concepts

• The supply function for XQS g(PX, Pfop, Poc,
  ST, N)WherePX Xs pricePfop the price
  of factors of productionPoc the opportunity
  costsST science and technologyN number of
  firms in the market

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• The supply function vs. supply
• The law of supply
• The supply curve - the picture
• movements along supply vs. shifts in supply

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market equilibrium

• The equilibrium price and quantity in a market
  occur at the price where the quantity demanded
  equals the quantity supplied.
• The market is at rest.
• The two blades of the scissors (demand and
  supply) together determine P and Q, equilibrium
  price and quantity.

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• The market equilibrium occurs at the intersection
  of the supply and demand curves.
• At price 17, the quantity supplied quantity
  demanded 23.