Mises AcademyAustrian Econ I:

Praxeology Through Price Theory

Robert P. MurphySpring 2011

Lecture 4May 18

2nd half Chapter 21. Schedules�CurvesII. Law of Supply/DemandIII. ElasticityIV. SpeculationV. Total Demand to Hold

VI. Time to Change VII. Demand vs. Quantity Demanded VIII. Producing the Stock IX. Rothbard on Property

I. Supply/Demand Schedule�

� Supply/Demand Curves

� Generic Supply/Demand Curves

II. Laws of Supply/Demand

As price increases, the quantity supplied will either increase or stay the same.

As price decreases, the quantity demanded will either increase or stay the same.

III. Elasticity

● If demand is elastic (in a certain range of prices), then lowering the price will lead to consumers spending more total money on the good.

● If demand is inelastic, then lowering the price will lead to less total money spent on the good.

IV. Speculation

V. Total Demand to Hold

TOTAL DEMAND TO HOLD =

EXCHANGE DEMAND (I.E. NORMAL DEMAND) +

RESERVATION DEMAND (I.E. AMOUNT SELLERS WITHHOLD FROM THE MARKET)

A. Regular Supply/Demand�

B. � Total Stock/Demand to Hold

C. Total Stock/Demand to Hold

VI. Now It’s Time to Change…

VII. Demand vs. Quantity demanded

VIII. Producing the Stock

IX. Rothbard on Property