Topic 3 - Demand Supply and Market Price 1. The Demand Curve -- Law of Downward-Sloping Demand; -- Market vs. Individual Demand Curve; -- Movement Along vs. Shift; 2. The Supply Curve -- Law of Upward-Sloping Supply; -- Market vs. Firm Suppl

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ECO100Y1-Pesando-Notes edited by Eva Wu
Topic 3 Demand, Supply and the Market Price
(Week three Sep 27th)
Outline:
1. The Demand Curve
-- Law of Downward-Sloping Demand;
-- Market vs. Individual Demand Curve;
-- Movement Along vs. Shift;
2. The Supply Curve
-- Law of Upward-Sloping Supply;
-- Market vs. Firm Supply Curve;
-- Movement Along vs. Shift;
3. Equilibrium (Price, Quantity) in Competitive Market
-- How Equilibrium is Determined;
-- Examples;
The Demand Curve
Competitive market: many buyers and sellers, each of who has no influence on market price (e.g. coffee);
1. Law of Downward-Sloping Demand
Other things equal, the higher is the price of the good, the lower is the quantity demanded.
Individual Demand
Price
Quantity
Demanded
5
0
4
3
3
6
2
9
2. Market Demand Curve
The sum of individual demand curve (at each possible price, sum of the quantities demanded by each
individual)
Janes individual demand Johns individual demand Market demand
9 Quantity Demanded
Price
5
2
6 Quantity Demanded
Price
3
3 Quantity Demanded
Price
3
Price
3
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