Summary Chapter 3 ~ economics 20th global edition

Economics Block 1 Chapter 3 Summary

LO3.1 characterize and give examples for markets
Market:
 Interactions between the buyer (deemandeers an dee seller (suppliers
 Markets can be  local, national, international
 Price  is deiscoverede in the interactions oo buyer ande seller

LO3.2 describe demand and explain how it can change
Demand:
 Displayede in schedeule or a deemande curve
 Shows the various amount oo a prodeuct that consumers are willing ande able to
purchase to goodes
o Amount consumers are willing ande able to purchase at a given price
o Willing ande able to buy  because only willingness is not efective in the
market
 Other things equal
 Indeivideual deemande
 Market deemande

Law of demand
 = other things equal  price oalls  the quantity deemandeede rises  ande as price
rises  the quantity deemande oalls
 Explanations
o Price acts as an obstacle to buyers
o Law oo deiminishing marginal utility
 Big mac  the seconde BM will yielde less satisoaction than the frst ect.
o Income efect ande substitution efect

Income effects occurs as a lower price increases the purchasing power oo money
income; this enables the consumer to buy more at a lower price (or
less at a higher price without having to redeuce consumption oo
other goodes.
Substitutions effect when a lower price gives an incentive to substitute the lower-pricede
goode oor the now relatively higher-pricede goodes.


The demand curve:
 Illustrates the inverse relationship between price
ande quantity
 Downwarde slope a lower quantity  high price
 Higher quantity  lower price
o = both the law oo deemande

Market demand