N. GREGORY
MANKIW
PRINCIPLES OF
ECONOMICS
Eighth Edition
LECTUR
The Market Forces
2
of Supply and Demand
Premium PowerPoint Slides by:
V. Andreea CHIRITESCU
Eastern Illinois University
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
1
management system for classroom use.
, Look for the answers to these questions
• What factors affect buyers’ demand for
goods?
• What factors affect sellers’ supply of goods?
• How do supply and demand determine the
price of a good and the quantity sold?
• How do changes in the factors that affect
demand or supply affect the market price
and quantity of a good?
• How do markets allocate resources?
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning 2
management system for classroom use.
, Markets and Competition
• Market
– A group of buyers and sellers of a
particular good or service
– Buyers as a group
• Determine the demand for the product
– Sellers as a group
• Determine the supply of the product
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning 3
management system for classroom use.
, Markets and Competition
• Competitive market
– Many buyers and many sellers, each has a negligible impact on
market price. e.g Icecream market
– Each seller of ice cream has limited control over the price because other sellers are
offering similar products. A seller has little reason to charge less than the going
price, and if he charges more, buyers will make their purchases elsewhere.
Similarly, no single buyer of ice cream can influence the price of ice cream
because each buyer purchases only a small amount.
• Perfectly competitive market
– All goods are exactly the same
– Buyers and sellers are so numerous that no one can affect the m
arket price, “Price takers” e.g wheat market
– In the wheat market, for example, there are thousands of farmers who sell wheat
and millions of consumers who use wheat and wheat products. Because no single
buyer or seller can influence the price of wheat, each takes the market price as
given. And called price taker. Means who can not influnce market price. .
– Quiz: What is a market? • What are the characteristics of a perfectly
competitivemarket?
4
MANKIW
PRINCIPLES OF
ECONOMICS
Eighth Edition
LECTUR
The Market Forces
2
of Supply and Demand
Premium PowerPoint Slides by:
V. Andreea CHIRITESCU
Eastern Illinois University
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
1
management system for classroom use.
, Look for the answers to these questions
• What factors affect buyers’ demand for
goods?
• What factors affect sellers’ supply of goods?
• How do supply and demand determine the
price of a good and the quantity sold?
• How do changes in the factors that affect
demand or supply affect the market price
and quantity of a good?
• How do markets allocate resources?
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning 2
management system for classroom use.
, Markets and Competition
• Market
– A group of buyers and sellers of a
particular good or service
– Buyers as a group
• Determine the demand for the product
– Sellers as a group
• Determine the supply of the product
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning 3
management system for classroom use.
, Markets and Competition
• Competitive market
– Many buyers and many sellers, each has a negligible impact on
market price. e.g Icecream market
– Each seller of ice cream has limited control over the price because other sellers are
offering similar products. A seller has little reason to charge less than the going
price, and if he charges more, buyers will make their purchases elsewhere.
Similarly, no single buyer of ice cream can influence the price of ice cream
because each buyer purchases only a small amount.
• Perfectly competitive market
– All goods are exactly the same
– Buyers and sellers are so numerous that no one can affect the m
arket price, “Price takers” e.g wheat market
– In the wheat market, for example, there are thousands of farmers who sell wheat
and millions of consumers who use wheat and wheat products. Because no single
buyer or seller can influence the price of wheat, each takes the market price as
given. And called price taker. Means who can not influnce market price. .
– Quiz: What is a market? • What are the characteristics of a perfectly
competitivemarket?
4
