Price of related goods Substitutes two goods for which an increase in the price of one leads to an increase in the demand for the other a Complements a two goods for which an increase in the price of one leads to a decrease in the demand for the other
2. Price of Related Goods ◼ Substitutes ◼ two goods for which an increase in the price of one leads to an increase in the demand for the other ◼ Complements ◼ two goods for which an increase in the price of one leads to a decrease in the demand for the other
Variables That Influence Buyers Variable A Change in This Variable Price Represents a movement along the demand curve Income i* positive w Price of related goods Substitutes positive complements negative Tastes Expectations positive Numbers of buyers positive TABLE 1
Variables That Influence Buyers Variable A Change in This Variable… Price Represents a movement along the demand curve Income Price of related goods ◼Substitutes ◼complements Tastes Expectations Numbers of buyers positive positive negative positive positive TABLE 1
2.3 SUPPLY quantity supplied u the amount of a good that sellers are willing and able to sell law of supply other things equal, the quantity supplied of a good rises when the price of the good rises supply schedule a table that shows the relationship between the price of a good and the quantity supplied supply curve good and the quantity supplied een the price of a a graph of the relationship betw
2.3 SUPPLY ◼ quantity supplied ◼ the amount of a good that sellers are willing and able to sell ◼ law of supply ◼ other things equal, the quantity supplied of a good rises when the price of the good rises ◼ supply schedule ◼ a table that shows the relationship between the price of a good and the quantity supplied ◼ supply curve ◼ a graph of the relationship between the price of a good and the quantity supplied
P rice o1 Price of Quantity of Ice-Cream Ice-Cream Cones Cone Demanded 0.00 2.5 0.50 1.00 1.An Increase 1.50 prIce 2.00 2.50 0012345 0.5 3.00 Ice-cream Cones 2. increase quantity of cones supplied. FIGURE 5
Price of Ice-Cream Cone Quantity of Cones Demanded $0.00 0.50 1.00 1.50 2.00 2.50 3.00 0 0 1 2 3 4 5 FIGURE 5 0 0.5 1 1.5 2 2.5 3 3.5 0 1 2 3 4 5 Price of Ice-Cream Cone Quantity of Ice-cream Cones 2…increase quantity of cones supplied. 1.An increase in price…
2.3.1 Market supply versus Individual Supply Market Supply is the Sum of Individual Supplies The quaniity supped in a market is the sum of the quantiles supplied by all the se/lers at each price. Thus, the market supply curve is found by adding horizontally the individual supply curves, At a price of $2, Ben supp/jes 3 ice-cream cones, and Jerry supplies 4 ice-cream cones. The quantity supped in the market at this price cones. Price of ice-Cream Cone Market 0.00 0.50 1.00 0014 1.50 2.00 2.50 0012345 000246 7 10 3.00 8
2.3.1 Market supply versus Individual Supply Price of Ice-Cream Cone Ben Jerry Market $0.00 0.50 1.00 1.50 2.00 2.50 3.00 0 0 1 2 3 4 5 + 0 0 0 2 4 6 8 = 0 0 1 4 7 10 13 The quantity supplied in a market is the sum of the quantities supplied by all the sellers at each price. Thus, the market supply curve is found by adding horizontally the individual supply curves. At a price of $2, Ben supplies 3 ice-cream cones, and Jerry supplies 4 ice-cream cones. The quantity supplied in the market at this price is 7 cones. ◼ Market Supply is the Sum of Individual Supplies