Lecture7(2005.10.8) Class today 57-67 Chapter 3-Supply and Demand: An Introduction Slide 1
MB MC Chapter 3 - Supply and Demand: An Introduction Slide 1 Lecture 7 (2005.10.8) ◼ Class today p57-67
I Supply and Demand An Introduction MB MC CHAPTER
MB MC Supply and Demand: An Introduction
Overview 1 Chapter 3 introduces markets and provides an overview of the supply and demand model. It begins by comparing central planning and the market as alternative methods of allocating resources Chapter 3-Supply and Demand: An Introduction Slide 3
MB MC Chapter 3 - Supply and Demand: An Introduction Slide 3 Overview 1 ◼ Chapter 3 introduces markets and provides an overview of the supply and demand model. It begins by comparing central planning and the market as alternative methods of allocating resources
Overview 2 It includes a brief history of economic thought regarding markets and prices. Emphasizing a core principle of the book, the chapter next discusses the concept of equilibrium. It explains how market forces bring the price and quantity back to equilibrium in the case of surpluses and shortages and includes discussion of price controls(price ceilings and floors). Finally, the chapter explains how to use the supply and demand model to explain changes in prices and quantities Chapter 3-Supply and Demand: An Introduction Slide 4
MB MC Chapter 3 - Supply and Demand: An Introduction Slide 4 Overview 2 ◼ It includes a brief history of economic thought regarding markets and prices. Emphasizing a core principle of the book, the chapter next discusses the concept of equilibrium. It explains how market forces bring the price and quantity back to equilibrium in the case of surpluses and shortages and includes discussion of price controls (price ceilings and floors). Finally, the chapter explains how to use the supply and demand model to explain changes in prices and quantities
Supply and Demand: An Introduction TWO examples: Food delivery system Rental housing market Chapter 3-Supply and Demand: An Introduction Slide 5
MB MC Chapter 3 - Supply and Demand: An Introduction Slide 5 Two examples: ◼ Food delivery system ◼ Rental housing market Supply and Demand: An Introduction
Supply and Demand: An Introduction ■ Market1 a How do consumers get the goods and services they want in the right quantities and qualities? o Some goods and services are allocated by the market forces of supply and demand Chapter 3-Supply and Demand: An Introduction Slide 6
MB MC Chapter 3 - Supply and Demand: An Introduction Slide 6 Supply and Demand: An Introduction ◼ Market 1 ◼ How do consumers get the goods and services they want in the right quantities and qualities? ⚫ Some goods and services are allocated by the market forces of supply and demand
Supply and Demand: An Introduction ■ Market2 Why do some goods and services have shortages or surpluses and others do not? o Some good and supplies services are regulated by government Chapter 3-Supply and Demand: An Introduction Slide 7
MB MC Chapter 3 - Supply and Demand: An Introduction Slide 7 Supply and Demand: An Introduction ◼ Market 2 ◼ Why do some goods and services have shortages or surpluses and others do not? ⚫ Some good and supplies services are regulated by government
What How, and for whom? Central Planning Versus the Market a Three Problems All Economic Systems Must Address What should be produced? How should it be produced? o For whom will it be produced? Chapter 3-Supply and Demand: An Introduction Slide 8
MB MC Chapter 3 - Supply and Demand: An Introduction Slide 8 What, How, and for Whom? Central Planning Versus the Market ◼ Three Problems All Economic Systems Must Address ⚫ What should be produced? ⚫ How should it be produced? ⚫ For whom will it be produced?
What, How and for whom? Central Planning Versus the Market Centralized Economic Organizations o Agrarian society o Former Soviet Union Cuba. North Korea ● China ● Bureaucracy Chapter 3-Supply and Demand: An Introduction Slide 9
MB MC Chapter 3 - Supply and Demand: An Introduction Slide 9 What, How, and for Whom? Central Planning Versus the Market ◼ Centralized Economic Organizations ⚫ Agrarian society ⚫ Former Soviet Union ⚫ Cuba, North Korea ⚫ China ⚫ Bureaucracy
What, How and for whom? Central Planning Versus the Market a small number of individuals address e What Establish production targets for factories and farms ●How Plan how to achieve the goals ● For Whon Distribute the goods and services produced Chapter 3-Supply and Demand: An Introduction Slide 10
MB MC Chapter 3 - Supply and Demand: An Introduction Slide 10 What, How, and for Whom? Central Planning Versus the Market ◼ A small number of individuals address ⚫ What Establish production targets for factories and farms ⚫ How Plan how to achieve the goals ⚫ For Whom Distribute the goods and services produced