Microeconomics 3
Subject:
Economics [1]
Tags:
Microeconomics Topic 3: ?Understand how various factors shift supply or demand and understand the consequences for equilibrium price and quantity.? Reference: Gregory Mankiw?s Principles of Microeconomics, 2nd edition, Chapter 4. The Supply and Demand Model Supply and demand is a model for understanding the how prices and quantities are determined in a market system. The explanation works by looking at two different groups -- buyers and sellers -- and asking how they interact. The supply and demand model relies on a high degree of competition, meaning that there are enough buyers and sellers in the market for bidding to take place. Buyers bid against each other and thereby raise the price, while sellers bid against each other and thereby