Transcription of Chapter 2 Demand and Supply Analysis
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Chapter 2 Demand and Supply Analysis
Chapter 2 Demand and Supply Markets Definition Assumptions of the Market Demand Market Supply Market Crude Oil Prices in US dollars3 Oil MarketWhy do oil price fluctuate? in Demand Weak economic activity Increased efficiency Substitute toward other Reasons Middle East trying to fold market to keep prices low to make it hard for substitutes Wars in middle Production in America Decreased oil imports to become more energy independent 4 Competitive Markets5 Definition:Markets were sellers and buyers are small and numerous, so they take the market price as given when they decide how much to buy and Market market:many buyers and sellers Implies buyers and sellers are price Products.
Elasticity Versus Slope n Slope: is the ratio of absolute changes in quantity and price. (= DQ/DP). §Measures the absolute change in quantity demanded (in units of quantity) due to a one-unit change in price. §Qd=a-bP § a is the intercept, -b is the slope n Elasticity:is the ratio of relative (or percentage) changes in quantity and price.
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