Kinh tế vi mô FTU - Lecture 2 3

Chapter 2 Demand and Supply Lecture 2: Demand Lecture 3: Supply and Market Mechanism Motivation Pig Epidemic Pushes Vietnamese Farmers Toward Cows and Ostriches Bloomberg news (5, 2019) The terms supply and demand refer to the behavior of people as they interact with one another in competitive markets. Market: is a group of buyers and sellers of a particular good or service. 2.1. Demand 2.1.1. Key definitions 2.1.2. The Law of demand 2.1.3. Illustrating demand 2.1.4. Determinants of demand 2.1.5. Distinguishing the movement along and shift of the demand curve 2.1.1 Key definitions Demand: is the amount of a good that buyers are willing and able to purchase at different prices in a particular period of time, ceteris parabus Quantity demanded: is the amount of a good that buyers are willing and able to purchase at a particular price in a particular period of time, ceteris parabus Individual demand vs Market demand 2.1.2 The law of demand Price ↓ Price ↑ → → Demand ↑ Demand ↓ Law of Demand There is an inverse relationship between price and quantity. When the price increases the quantity demanded decreases, and vice versa, other things equal (ceteris paribus). Ceteris Paribus Ceteris paribus is a Latin phrase that means all variables other than the ones being studied are assumed to be constant. Literally, ceteris paribus means “other things being equal.” The demand curve slopes downward because, ceteris paribus, lower prices imply a greater quantity demanded!