ME 2334 Chapter : Thermo Formulas 3
Document Summary
Demand value buyers derive from the good cost to produce. Government - decides prices and distribution buyers want to benefit from the good sellers want to make a profit. Buyers and sellers have different motivations the market - distribution depends on the interaction buyers and sellers. Demand reflects the entire market, not one consumer demand curves have a negative slope consumers buy less at higher prices consumers buy more at lower prices. The buyer"s reservation price is the highest price an individual is willing to pay for a good lower prices bring more buyers into the market lower prices cause existing buyers to buy more. Buyers buy more at lower prices and buy less at higher prices. The supply curve the substitution effect: buyers switch to substitutes when price goes up the income effect: buyers" overall purchasing power goes down. The supply curve illustrates the quantity of a good that sellers are willing to offers at each prices.
