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Introduction to Economics I Lecture 3

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Introduction to Economics I

Lecture 3

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Lecture 3

Market

Market, a means by which the exchange of goods and services takes place as a result of buyers and sellers being in contact with one

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Lecture 3

Supply and demand

Supply and demand, in economics, is the relationship between the quantity of a commodity that producers wish to sell and the quantity of a commodity that consumers wish to buy at various prices .

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Lecture 3

Market Equilibrium

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Lecture 3

The law of demand

The law of demand says that at higher prices, buyers will demand less of an economic good.

• The law of supply says that at higher prices, sellers will supply more of an economic good.

• These two laws interact to determine the actual market prices and volume of goods that are traded on a market.

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Lecture 3

The law of supply

The law of supply says that at higher prices, sellers will supply more of an economic good.

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Lecture 3

The law of demand & The law of supply

These two laws interact to determine the actual market prices and volume of goods that are traded on a market.

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Lecture 3

An Example

where Qd and Qs is quantity demanded and quantity supplied, respectively. P denotes the price level.

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Lecture 3

Solution Qd=100-4P Qs=6P In equilibrium Qd=Qs. 100-4P=6P 100=10P

P=10 is the equilibrium price level.

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