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Oferta y Demanda

Oferta y Demanda

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Published by: Rosario Rivera Negrón on Apr 21, 2010
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07/15/2010

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45
 
3
DEMAND ANDSUPPLY
Key Concepts
 
Markets and Prices
 A 
competitive market 
is one that has so many buyersand sellers so that no single buyer or seller can influ-ence the price. The ratio of the money price of onegood to the money price of another good is the
relativeprice
. The relative price of a good is the good’s oppor-tunity cost. The demand for and supply of a productdepend, in part, on its relative price.
 
Demand
The
quantity demanded 
of a good is the amount thatconsumers plan to buy during a time period at a par-ticular price. The
law of demand 
states that “otherthings remaining the same, the higher the price of agood, the smaller is the quantity demanded.” Higherprices decrease the quantity demanded for two reasons:
 
Substitution effect 
— a higher relative price raises theopportunity cost of buying a good and so peoplebuy less of it.
 
Income effect 
— a higher relative price reduces theamount of goods people can buy. Usually this effectdecreases the amount people buy of the good thatrose in price.
Demand 
is the entire relationship between the price of a good and the quantity demanded. A 
demand curve
 shows the inverse relationship between the quantity demanded and price, everything else remaining thesame. For each quantity, a demand curve shows thehighest price someone is willing to pay for that unit.This highest price is the
marginal benefit 
a consumerreceives for that unit of output.
 
Demand curves are negatively sloped, as illustratedin Figure 3.1.
 
 A change in the price of the good or service leads toa
change in the quantity demanded 
and
a move-ment along the demand curve 
. The higher the priceof a good or service, the lower is the quantity de-manded. This relationship is shown in Figure 3.1 with the movement along
D
0
from 4,000 to 2,000street hockey balls demanded per week in responseto a rise in price from $2 to $4 for a street hockey ball. A 
change in demand 
and
a
 
shift in the demand curve 
,occur when any factor that affects buying plans, otherthan the price of the product changes. An increase indemand means that the demand curve shifts rightward,such as the shift from
D
0
to
D
1
in Figure 3.1; a decreasein demand refers to the demand curve shifting leftward.
Chapter
 
 
46
CHAPTER 3
The demand curve shifts with changes in:
 
 prices 
 
of  
 
related 
 
 goods 
— a rise in the price of a
sub-stitute
increases demand and shifts the demandcurve rightward; a rise in the price of a
complement 
 decreases demand and shifts the demand curve left- ward.
 
expected future prices 
— if the price of a good is ex-pected to rise in the future, the current demand forit increases and the demand curve shifts rightward.
 
income 
— for a
normal good 
, an increase in in-come increases demand and shifts the demand curverightward; for an
inferior good 
an increase in in-come decreases demand and shifts the demandcurve leftward.
 
expected future income 
— when expected future in-come increases, the current demand might increase.
 
 population
— an increase in population increasesdemand and shifts the demand curve rightward.
 
 preferences 
— if people like a good more, its demandincreases so the demand curve shifts rightward.
 
Supply
The
quantity supplied 
of a good or service is theamount that producers plan to sell during a given timeperiod at a particular price.The
law of supply 
states that “other things remainingthe same, the higher the price of a good, the greater isthe quantity supplied.”
Supply 
is the entire relation-ship between the quantity supplied and the price of agood. A 
supply curve
shows the positive relationshipbetween the price and the quantity supplied. For eachquantity, the supply curve shows the minimum price asupplier must receive in order to produce that unit of output.
 
Supply curves are positively sloped, as shown inFigure 3.2.
 
 A change in the price of the product leads to a
change in the quantity supplied 
and a
movement along the supply curve 
. In Figure 3.2, the movementalong
0
 
from 2,000 street hockey balls supplied per week to 4,000 balls when the price rises from $2 fora ball to $4 is a change in the quantity supplied. When any factor that influences selling plans otherthan the price of the good changes, there is a
change insupply,
 which is illustrated
as a shift in the supply curve 
. An increase in supply shifts the supply curve rightward,shown in Figure 3.2 as the shift from
0
to
1
; a de-crease in supply shifts the supply curve leftward.There is a change supply and a shift in the supply curvein response to changes in the following:
 
 prices of the productive resources 
 
used to produce the  good 
— a rise in the price of an input decreases sup-ply and the supply curve shifts leftward.
 
 prices of related goods produced 
— a rise in the priceof a
substitute 
 
in
 
 production
decreases supply and thesupply curve shifts leftward; a rise in the price of a
complement 
 
in
 
 production
increases supply and thesupply curve shifts rightward.
 
expected future prices 
— if the price is expected torise in the future, the current supply decreases andthe supply curve shifts leftward.
 
number of suppliers 
— an increase in the number of suppliers increases supply and the supply curveshifts rightward.
 
technology 
— an advance in technology increasessupply and the supply curve shifts rightward.
 
Market Equilibrium
The
equilibrium price
is the price at which the quan-tity demanded equals the quantity supplied. It is de-termined by the intersection of the demand and supply curves. The
equilibrium quantity 
is the quantity bought and sold at the equilibrium price. Figure 3.3shows the equilibrium price, $3, and the equilibriumquantity, 3,000 street hockey balls per week. At pricesbelow the equilibrium price, a shortage exists and the
Factores que provocan desplazamiento de la curva de Demanda:
 
Factores que provocan desplazamiento de la curva de Oferta:
 
DEMAND AND SUPPLY
47
 
price rises. At prices above the equilibrium price, a sur-plus exists and the price falls. Only at the equilibriumprice does the price not change.
 
Predicting Changes in Price and Quantity
 When either the demand
or 
supply changes so that
one 
 of the demand or supply curves shifts, the effect onboth the price (
) and quantity (
) can be deter-mined:
 
 An increase in demand (a rightward shift in thedemand curve) raises
and increases
.
 
 A decrease in demand (a leftward shift in the de-mand curve) lowers
and decreases
.
 
 An increase in supply (a rightward shift in the sup-ply curve) lowers
and increases
.
 
 A decrease in supply (a leftward shift in the supply curve) raises
and decreases
. When both the demand and supply change so thatboth the demand and supply curves shift, the effect onthe price
or 
the quantity can be determined, but with-out information about the relative sizes of the shifts,the effect on the other variable is ambiguous.
 
If both demand and supply increases (both curvesshift rightward), the quantity increases but the pricemight rise, fall, or remain the same.
 
If demand decreases (the demand curve shifts left- ward) and supply increases (the supply curve shiftsrightward), the price falls but the quantity mightincrease, decrease, or not change.
Helpful Hints
1.
 
D
EVELOPING
I
NTUITION
A
BOUT
D
EMAND
:
  When you are first learning about demand andsupply, think in terms of concrete examples. Havesome favorite examples in the back of your mind.For instance, when you hear “complementary goods” (goods used together), think about hot dogsand hot dog buns because few people eat hot dogs without using a hot dog bun. For “substitutegoods” (things that take each other’s place) think about hot dogs and hamburgers because they areobvious substitutes.
2.
 
D
EVELOPING
I
NTUITION
A
BOUT
S
UPPLY
:
Aneasy and concrete way to identify with suppliers isto think of “profit”: Anything that increases theprofit from producing a product (except for theprice of the good itself) increases the supply andshifts the supply curve rightward, whereas anythingthat decreases profit decreases the supply and shiftsthe supply curve leftward.
3.
 
S
HIFT IN A
C
URVE
V
ERSUS A
M
OVEMENT
A
LONG A
C
URVE
:
Failing to distinguish correctly between a shift in a curve and a movement along acurve can lead to error and lost points on examina-tions. The difference applies equally to both de-mand and supply curves.The important point to remember is
that a change in the price of a good does not shift its demand curve;
 it leads to a movement along the demand curve. If one of the other factors affecting demand changes,the demand curve itself shifts.Similarly, the supply curve shifts if some relevantfactor that affects the supply,
other than the price of  the good,
changes. A change in the price of the goodleads to a movement along the supply curve.
4.
 
R
ULES FOR
U
SING A
S
UPPLY
/D
EMAND
D
IA-GRAM
:
The safest way to solve any demand andsupply problem is always to draw a graph. A few mechanical rules can make using demand and sup-ply graphs easy. First, when you draw the graph, besure to label the axes. As the course progresses, you will encounter many graphs with different variableson the axes. You can become confused if you donot develop the habit of labeling the axes. Second,draw the demand and supply curves as straightlines. Third, be sure to indicate and label the initialequilibrium price and quantity.

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