Name: __________________________________________

READING OUTLINE

Principles of Microeconomics Dr. Sauer

Chapter 4: The Market Forces of Supply and Demand I. Markets and Competition A. What is a Market?

B. What is Competition?

II. Demand A. The Demand Curve The Quantity Demanded refers to the amount:

The Law of Demand says:

A Demand Schedule is a table that shows:

A Demand Curve is:

B. Market Demand vs Individual Demand

C. Shifts in the Demand Curve When the demand curve shifts to the right, it is called an: When the demand curve shifts to the left, it is called a:

The 5 things that will cause the demand curve to shift: 1. Income:

normal goods are:

inferior goods are:

2. Prices of Related Goods:

substitutes are:

complements are:

3. Tastes:

4. Expectations:

5. Number of buyers

Review Figure 4: Shifts in the Demand Curve vs Movements Along the Demand Curve Shift in Demand Curve Movement Along Demand Curve

III. Supply A. The Supply Curve The Quantity Supplied refers to the amount:

The Law of Supply says:

A Supply Schedule is a table that shows:

A Supply Curve is:

B. Market Supply vs Individual Supply

C. Shifts in the Supply Curve When the supply curve shifts to the right, it is called an: When the supply curve shifts to the left, it is called a:

The 4 things that will cause the supply curve to shift: 1. Input Prices:

2. Technology:

3. Expectations:

4. Number of Sellers

Shifts in the Supply Curve vs Movements Along the Supply Curve Shift in Supply Curve Movement Along Supply Curve

IV. Supply and Demand Together A. Equilibrium Equilibrium refers to: The equilibrium price refers to: The equilibrium quantity refers to:

Illustrate a market in equilibrium on the axis below.

If the price were above the equilibrium price, a __________________________ would be the result. If the price were below the equilibrium price, a __________________________ would be the result.

B. Steps for Analyzing a Change in Equilibrium Step 1: Decide whether the event shifts:

Step 2: Decide whether the curve shifts:

Step 3: Use the Supply & Demand diagram to:

_______________________________________________________________________________ In the News: Price Increases After Disasters

________________________________________________________________________________

V. How Prices Allocate Resources: