Chapter 2: Markets
Chapter 2: Markets
Chapter 2: Markets 21 INTRODUCTION 2.2 DEMAND 2 3 SUPPLY 2 4 SUPPLY AND DEMAND TOGETHER
Chapter 2: Markets 2.1 INTRODUCTION 2.2 DEMAND 2.3 SUPPLY 2.4 SUPPLY AND DEMAND TOGETHER
2.1 NTRODUCTION Market a group of buyers and sellers of a particular good or service Partitioners buyers, sellers Price ys Amount price- independent varlable amount -induced variable Competitive market a market in which there are many buyers and many sellers so that each has a negligible impact on the market price Characteristics 1. the goods being offered for sale are all the same 2. the buyers and sellers are so numerous that no single buyer or seller can influence the market price
2.1 INTRODUCTION ◼ Market ◼ a group of buyers and sellers of a particular good or service ◼ Partitioners ◼ buyers, sellers ◼ Price vs Amount ◼ price – independent variable ◼ amount – induced variable ◼ Competitive market ◼ a market in which there are many buyers and many sellers so that each has a negligible impact on the market price ◼ Characteristics: 1. the goods being offered for sale are all the same 2. the buyers and sellers are so numerous that no single buyer or seller can influence the market price
MARKET PRODUCTION Market production involves sale in a market before consumption occurs Non-market production does not involve sale in market before consumption
MARKET PRODUCTION ◼ Market production ◼ involves sale in a market before consumption occurs ◼ Non-market production ◼ does not involve sale in market before consumption
Marketing Human activity directed at satisfying needs and wants through exchange processes
Marketing ◼ Human activity directed at satisfying needs and wants through exchange processes
Look at the list of examples of production and indicate which are non-market production and which are market production, Also indicate that are mixture of both Sewing a dress using a sewing machine at home and using materials and a pattern bought from a fabric shop Catching fish using a home-made lure Watching at home with a group of friends a new-release video rented from the local video library Flying to America to go to Disneyland Swimming in your neighbor's pool Buying a ticket for a rock concert Babysitting your neighbors children for $5 per hour 8. Having a backyard barbecue using meat from the local butcher and salad vegetables from your own garden Buying Coke or Pepsi from a dispensing machine at the local mixed business and drinking it while walking home from school 10. Going for a walk along a beach
◼ Look at the list of examples of production and indicate which are non-market production and which are market production. Also indicate that are mixture of both. 1. Sewing a dress using a sewing machine at home and using materials and a pattern bought from a fabric shop 2. Catching fish using a home-made lure 3. Watching at home with a group of friends a new-release video rented from the local video library 4. Flying to America to go to Disneyland 5. Swimming in your neighbor’s pool 6. Buying a ticket for a rock concert 7. Babysitting your neighbor’s children for $5 per hour 8. Having a backyard barbecue using meat from the local butcher and salad vegetables from your own garden 9. Buying Coke or Pepsi from a dispensing machine at the local mixed business and drinking it while walking home from school 10. Going for a walk along a beach
PRICE IN MARKETS ADAM SMITH AND THE INVISIBLE HAND 1776 The Wealth of Nations a invisible hand Participants in economy are motivated by self-interest and that the invisible hand of the marketplace guides this self- interest into promoting general economIc we∥ being
PRICE IN MARKETS ◼ ADAM SMITH AND THE INVISIBLE HAND ◼ 1776, The Wealth of Nations ◼ invisible hand Participants in economy are motivated by self-interest and that the “invisible hand” of the marketplace guides this selfinterest into promoting general economic well-being
2.2 DEMAND Demand People have almost unlimited wants but limited resources Wants become demands when backed by purchasing power. quantity demanded the amount of a good that buyers are willing and able to purchase law of demand Ceteris paribus(other things equal), the quantity demanded of a good falls when the price of the good rises demand vs price- negatively related
2.2 DEMAND ◼ Demand ◼ People have almost unlimited wants but limited resources. Wants become demands when backed by purchasing power. ◼ quantity demanded ◼ the amount of a good that buyers are willing and able to purchase ◼ law of demand ◼ Ceteris paribus (other things equal), the quantity demanded of a good falls when the price of the good rises ◼ demand vs price - negatively related
2.2.1 DEMAND SCHEDULE AND CURVE a Demand schedule a table that shows the relationship between the price of a good and the quantity demanded a Denand Curye a graph of the relationship between the price of a good and the quantity demanded
2.2.1 DEMAND SCHEDULE AND CURVE ◼ Demand Schedule ◼ a table that shows the relationship between the price of a good and the quantity demanded ◼ Demand Curve ◼ a graph of the relationship between the price of a good and the quantity demanded
The demand schedule shows the quantity demanded at each price. the demand curve, which graphs the demand schedule, shows how the guantity demanded of the good changes as its price varies, Because a lower price increases the quantity demanded, the demand curve slopes downward Ice-cream C85e 1. A decrease in price Price of Quantity of Ice-cream Cone Cones Demand $2.00 $0.00 0.50 1.00 8 1.50 0.50 2.00 2.50 3.00 0 Quantity of 2…. ncreases quantity of Ice-cream Cones FIGURE 1 cones demanded
The demand schedule Price of Ice-cream Cone Price of Ice-cream Cone Quantity of Cones Demand $0.00 0.50 1.00 1.50 2.00 2.50 3.00 12 10 8 6 4 2 0 Quantity of Ice-cream Cones 2....increases quantity of cones demanded 1. A decrease in price… $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 0 2 4 6 8 1 0 1 2 The demand schedule shows the quantity demanded at each price. the demand curve, which graphs the demand schedule, shows how the quantity demanded of the good changes as its price varies. Because a lower price increases the quantity demanded, the demand curve slopes downward. FIGURE 1
