Demand and Supply
Read this chapter and attempt the "Try It" exercises. Also, complete the concept problems and the numerical problems at the end of the chapter. This chapter will help you gain familiarity and competencies with regard to basic demand and supply concepts. At a minimum, you should be able to list the factors that shift the demand curve and those that shift the supply curve. Make sure to carefully study the difference between demand and quantity demanded (and the difference between supply and quantity supplied).
3.3 Demand, Supply, and Equilibrium
- Use demand and supply to explain how equilibrium price and quantity are determined in a market.
- Understand the concepts of surpluses and shortages and the pressures on price they generate.
- Explain the impact of a change in demand or supply on equilibrium price and quantity.
- Explain how the circular flow model provides an overview of demand and supply in product and factor markets and how the model suggests ways in which these markets are linked.
In this section we combine the demand and supply curves we have just studied into a new model. The model of demand and supply uses demand and supply curves to explain the determination of price and quantity in a market.