Académique Documents
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and Supply
Chapter 2
Consumers and Producers
Consumers INTERACTION Producers
Kinds:
Wet market
Dry market
Stock market
Demand (Household/Buyer)
Demand
ceteris paribus
Reason:
Consumers tend to MAXIMIZE SATISFACTION
Demand Schedule and Demand Curve
Demand Demand
Schedule Curve
A table that shows the A graphical representation
relationship of prices and showing the relationship
the specific quantities between price and
demanded at each of quantities demanded per
these prices time period
Demand Schedule and Demand Curve
Change in quantity demanded
Brought by an
increase (decrease)
in the product’s
price
Change in demand
Brought by factors
other than the price
of the product
Forces that cause the demand curve to
change
1. Taste or preferences
2. Changing incomes
Forces that cause the demand curve to
change
3. Occasional or seasonal
products
4. Population change
Forces that cause the demand curve to
change
5. Substitute goods
ceteris paribus
Reason:
Producers tend to MAXIMIZE PROFITS
Supply Schedule and Supply Curve
Supply Supply
Schedule Curve
A graphical representation
A table that shows the
showing the relationship
relationship of prices and the
between price or factor of
specific quantities supplied
production and quantities
at each of these prices
supplied per time period
Supply Schedule and Supply Curve
Supply Curve Supply Schedule
Change in quantity supplied
Brought by an increase
(decrease) in the product’s
own price
Change in supply
Brought by factors other than
the price of the product
Forces that cause supply curve to change
1. Optimization in the use of
factors of production
2. Technological change
Forces that cause supply curve to change
4. Number of sellers
Forces that cause supply curve to change
5. Weather conditions
Forces that cause supply curve to change
6. Government policy
Shortage - a condition in
the market where the
quantity supplied is less
than the quantity
demanded
Price Controls
Floor Price – legal minimum
price imposed by the
government
floor
ceiling