Macro Chapter03

PART I INTRODUCTION TO ECONOMICS

Demand, Supply, and
Market Equilibrium

3

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Macroeconomics 9e by Case, Fair and Oster

PART I INTRODUCTION TO ECONOMICS

CHAPTER 3 Demand, Supply, and Market Equilibrium

Demand, Supply, and
Market Equilibrium

3
CHAPTER OUTLINE
Firms and Households: The Basic
Decision-Making Units
Input Markets and Output Markets: The
Circular Flow
Demand in Product/Output Markets
Changes in Quantity Demanded versus Changes in Demand
Price and Quantity Demanded: The Law of
Demand
Other Determinants of Household Demand
Shift of Demand versus Movement Along the
Demand Curve
From Household Demand to Market Demand
Supply in Product/Output Markets
Price and Quantity Supplied: The Law of Supply
Other Determinants of Supply
Shift of Supply versus Movement Along the
Supply Curve
From Individual Supply to Market Supply
Market Equilibrium
Excess Demand
Excess Supply
Changes in Equilibrium
Demand and Supply in Product Markets: A
Review
Looking Ahead: Markets and the
Allocation of Resources

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Macroeconomics 9e by Case, Fair and Oster

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CHAPTER 3 Demand, Supply, and Market Equilibrium

Firms and Households: The Basic Decision-Making Units

firm An organization that transforms resources
(inputs) into products (outputs). Firms are the primary producing units in a market economy. entrepreneur A person who organizes, manages, and assumes the risks of a firm, taking a new idea or a new product and turning it into a successful business. households The consuming units in an economy.

© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Macroeconomics 9e by Case, Fair and Oster

3 of 49

CHAPTER 3 Demand, Supply, and Market Equilibrium

Input Markets and Output Markets: The Circular Flow

product or output markets The markets