CHAPTER3Where Prices Come From:The Interaction of Demand and SupplyChapterOutlineandLearningObjectives3.1TheDemand Side oftheMarket3.2TheSupplySide oftheMarket3.3Market Equilibrium:PuttingDemand and SupplyTogether3.4TheEffectofDemandandSupplyShiftsonEquilibrium
1 Chapter Outline and Learning Objectives 3.1 The Demand Side of the Market 3.2 The Supply Side of the Market 3.3 Market Equilibrium: Putting Demand and Supply Together 3.4 The Effect of Demand and Supply Shifts on Equilibrium CHAPTER 3 CHAPTER Where Prices Come From: The Interaction of Demand and Supply
WhatDetermines the Price of a Smartphone?Demandforsmartphones. How many smartphones do consumers want to buy?:Affected byprice of thesmartphones.Affected byotherfactors,including pricesof othergoodsSupplyofsmartphones: How many smartphones are producers willingto sell?. Affected by price of the smartphones. Affected by otherfactors, including prices of other goodsWe will analyze these in a perfectly competitive market: amarket with (1) many buyers and sellers, (2) all firms sellingidentical products, and (3) no barriers to new firms entering themarket.2015PearsonEducation,Inc
© 2015 Pearson Education, Inc. 2 What Determines the Price of a Smartphone? Demand for smartphones • How many smartphones do consumers want to buy? • Affected by price of the smartphones • Affected by other factors, including prices of other goods Supply of smartphones • How many smartphones are producers willing to sell? • Affected by price of the smartphones • Affected by other factors, including prices of other goods We will analyze these in a perfectly competitive market: a market with (1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market
TheDemandSideoftheMarket3.1LEARNINGOBJECTIVEDiscussthevariablesthatinfluencedemand2015PearsonEducation,lnc
LEARNING OBJECTIVE © 2015 Pearson Education, Inc. 3 The Demand Side of the Market 3.1 Discuss the variables that influence demand
DemandSchedulesandQuantityDemandedDemand schedule:A table that shows the relationship betweenthe price of a product and the quantity of the product demanded.Quantity demanded: The amount of a good or service that aconsumeriswillingandabletopurchaseatagivenpricePriceDemand Schedule(dollarsperPriceQuantitysmartphone)(millionsof(dollarspersmartphonessmartphone)perweek)$300$30082509250200102001501115012100100DemandFigure 3.1Ademandscheduleandademandcurve809101112Quantity(millionsofsmartphonesperweek)@2015PearsonEducation,lnc
© 2015 Pearson Education, Inc. 4 Demand Schedules and Quantity Demanded Demand schedule: A table that shows the relationship between the price of a product and the quantity of the product demanded. Quantity demanded: The amount of a good or service that a consumer is willing and able to purchase at a given price. A demand schedule and a demand curve Figure 3.1
DemandCurveandMarketDemandDemand curve:A curve that shows the relationship between theprice of a product and the quantity of the product demanded.Market demand: the demand by all the consumers of a given goodorservicePriceDemand Schedule(dollarsperPriceQuantitysmartphone)(dollarsper(millionsofsmartphonessmartphone)perweek)$300$30082509250200102001501115012100100DemandFigure 3.1Ademandscheduleandademandcurve809101112Quantity(millionsofsmartphonesperweek)@2015PearsonEducation,lnc
© 2015 Pearson Education, Inc. 5 Demand Curve and Market Demand Demand curve: A curve that shows the relationship between the price of a product and the quantity of the product demanded. Market demand: the demand by all the consumers of a given good or service. A demand schedule and a demand curve Figure 3.1