A. Define carefully what is meant by a demand schedule or...

a. Define carefully what is meant by a demand schedule or curve. State the law of downward-sloping demand. Illustrate the law of downward-sloping demand with two cases from your own experience. b. Define the concept of a supply schedule or curve. Show that an increase in supply means a rightward and downward shift of the supply curve. Contrast this with the rightward and upward shift of the demand curve implied by an increase in demand.

a. Define carefully what is meant by a demand schedule or curve. State the law of downward-sloping demand. Illustrate the law of downward-sloping demand with two cases from your own experience.
b. Define the concept of a supply schedule or curve. Show that an increase in supply means a rightward and downward shift of the supply curve. Contrast this with the rightward and upward shift of the demand curve implied by an increase in demand.

Key Concepts

Demand Curve Shifts

An increase in demand is represented by a rightward and upward shift of the demand curve, indicating that consumers are willing to purchase more of the good at every price point. This shift can result from factors like a rise in consumer income, changes in tastes, or the availability of complementary goods, and it signifies a change in market conditions independent of the good’s current price.

Supply Schedule

A supply schedule is a tabular or graphical representation detailing the quantity of a good or service that producers are willing and able to offer for sale at different prices, holding other factors constant. It establishes the basis for the supply curve, which typically slopes upward due to increasing marginal costs as production expands.

Supply Curve Shifts

An increase in supply is illustrated by a rightward and downward shifting of the supply curve, meaning that at each price level, a greater quantity is available. This shift can be caused by factors such as improved technology, lower input costs, or favorable policy changes, and it contrasts with movements along the curve which are typically in response to price changes.

Demand Schedule

A demand schedule is a tabular or graphical representation showing the quantity of a good or service that consumers are willing and able to purchase at various prices, holding all other factors constant. It highlights the relationship between price and quantity demanded and serves as the foundation for constructing the demand curve.

Law of Downward-Sloping Demand

The law of downward-sloping demand states that, ceteris paribus, as the price of a good or service decreases, the quantity demanded increases, and vice versa. This inverse relationship reflects consumer behavior and the substitution and income effects, and it is a cornerstone of microeconomic theory.

Transcript

00:01 Supply and demand schedules show us at each price in our possibilities of prices, how much quantity will be either supplied or demanded.

00:11 So we show many different prices, right? so we may start at $1 and then go in increments of once at $1, $2, $3, and then we'll see how our quantities change at each price.

00:23 We can also show this in a graph right down here, and we'll return to this graph later when we think about shifts in this.

00:30 And demand curves.

00:32 But to think about why supply and demand are shaped the way they are, so first let's talk about the law of downward sloping.

00:43 That should be demand.

00:45 So law of downward sloping demand.

00:51 So the reason for this is, so as we see on this graph, as we increase quantity, or sorry, as we increase the price, the amount of quantity that is demanded decreases, right? that's pretty easy to think about in our own lives.

01:05 So as the price of something increases, we may want to buy less of it in order to maintain our budget or just be economical.

01:14 So say you go to the movies regularly, maybe once a week, but movie tickets increase from, say, $5 to $10.

01:21 So now you say, okay, i'll go every other week instead of every week.

01:25 So that's an example of why the quantity tends to decrease as the price increases for demand.

01:33 So quantity decreases as price increases.

01:40 All right, now let's think of the flip side, the law of upward slipping supply.

01:45 So if you're, say, a producer and you produce a certain good, we'll just call this a law of supply...

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