Pearson Microeconomics Ch. 1

1. Price
2. Tastes & Preferences
3. Information/Misinformation
4. Prices of other goods
5. Income
6. Government Actions

The amount a person would be willing and able to buy at a given price

The set of all possible quantity demanded at each possible price

Consumers will buy more of a good when its price is lower and less when its price is higher.

1. Government Actions: Taxes decrease demand
2. Income: Higher income, increase demand
3. Prices of other goods:
Increase $ of Substitutes, Increase demand
Increase $ of Complements, Decrease demand
4. Information
5. Tastes & Preferences

a good that can be used IN PLACE OF another good

a good that is CONSUMED WITH another good

Q = D(P, Pc, Ps, Y)
P = Price of good
Pc = Price of complement
Ps = Price of substitute
Y = Income

Sum the curves themselves horizontally.

1. Price of good
2. Costs of production -- prices of inputs
3. Number of producers
4. Government Rules & Regulation
5. Technology

the amount of a good that sellers are willing and able to sell at a given price

Quantity supplied at each possible price.

Q = S(P, Pc)
Q = quantity
P = Price of the good
Pc = Price of related good

Use the total quantity produced by all suppliers. Take the horizontal sum.

A point where nobody wants to shift his or her behavior in the market. (Equilibrium Price and Quantity)

when quantity supplied is more than quantity demanded
Demand Price must be equal to Supply Price.
Qd < Qs
Pd = Ps

when quantity demanded is greater than quantity supplied
Demand Price must be equal to Supply Price.
Qd > Qs
Pd = Ps

when quantity demanded is not equal to quantity supplied.
Qd =/= Qs

1. Licensing laws /
2. Quotas
3. Price controls

A legal maximum on the price at which a good can be sold

A legal minimum on the price at which a good can be sold