Chapter 3. Supply and Demand

Link to syllabus

Skip discussions of substitutes and complements (p. 71), and of normal and inferior goods (p. 72).

Figure 3-1 p. 67. Demand Curve

Figure 3-2 p. 69. An Increase in Demand

Figure 3-3 p. 71. Movement Along the DemandCurve versus Shift of the Demand Curve

P. 71. Factors that Shift Demand

• Changes in the prices of related goods• Changes in income• Changes in tastes• Changes in expectations• Changes in the number of consumers

Skip the conversations about substitutes and complements, normal and inferior goods.

Figure 3-6 p. 76. The Supply Schedule and the Supply Curve

p. 79. Factors that Shift Supply

• Changes in input prices• Changes in the prices of related goods• Changes in technology• Changes in expectations• Changes in the number of producers

Skip the conversation about substitutes and complements

Figure 3-11 p. 84. Market Equilibrium

Figure 3-12 p. 86. A Price above Equilibrium Creates a Surplus

This discussion is continued in the next chapter

Figure 3-13 p. 87. A Price Below Equilibrium Creates a Shortage

Continued in the next chapter.

1) Distinguish between shift of a curve, and movement along a curve. (see pages 69, 77-78).

2) Talk about shifts to the right and to the left, not up and down. (can be misleading when referring to supply).

3) We will ignore downward sloping part of supply (falling costs, such would occur when there are economies of scale). That’s micro.

m.t.’s comments about Supply and Demand Analysis