The document summarizes key concepts in microeconomics related to supply and demand. It defines demand as the desire and ability to purchase a good, and explains the law of demand. It also defines supply as the amount sellers are willing and able to sell, and explains the law of supply. The document discusses how equilibrium price is reached when supply and demand are equal, and the impacts of surpluses, shortages, price floors and ceilings. It also covers elasticity, production costs for firms, and different market structures including perfect competition, monopoly, oligopoly and monopolistic competition.

1. Supply and Demand Academic Unit 4: Microeconomics

2. I. Demand

8. II. Supply

12. III. Supply and Demand Together

13. A. Equilibrium Equilibrium Price Surplus Shortage Demand Supply Price Floor : Minimum Wage Price Ceiling: Rent Control

16. Figure 1 The Price Elasticity of Demand Copyright©2003 Southwestern/Thomson Learning (a) Perfectly Inelastic Demand: Elasticity Equals 0 Quantity 0 Price $5 4 Demand 100 1. An increase in price . . . 2. . . . leaves the quantity demanded unchanged.

17. Figure 1 The Price Elasticity of Demand (e) Perfectly Elastic Demand: Elasticity Equals Infinity Quantity 0 Price $4 Demand 2. At exactly $4, consumers will buy any quantity. 1. At any price above $4, quantity demanded is zero. 3. At a price below $4, quantity demanded is infinite.

20. Cars Some High, very expensive Similar products, but with substitutes A Few Oligopoly Clothes: Shirts, pants Little Very Low Similar products, but with substitutes Many Monopolistic Competition Public Sewage Complete Difficult if not impossible Unique One Monopoly Agricultural products, stock None None, perfectly free to start a business Homogenous, Identical Many Perfect Competition Example Control Over Prices Barriers to Entry Variety of Goods Number of Firms Business Organization