In the previous two lessons, we discussed the basics of the supply and demand curve, and the origins of the curves. In this lesson, we will take a look at how the interaction of the two sides of the market creates wealth for both sides, and then we will talk about how the market changes with time, and what drives those changes. What factors cause prices to go up or down, and what drives the quantities of different goods sold?
What will we learn?
By the end of this lesson, you should be able to:
- explain what consumer surplus, producer surplus and total wealth generated by a market are;
- identify the parts of a supply and demand diagram that represent consumer and producer surplus;
- describe the changes in the equilibrium prices and quantities caused by movements of the supply and demand curves;
- describe and explain the underlying causes of movements of the supply and demand curves.
What is due for Lesson 4?
This lesson will take us one week to complete. Please refer to Canvas for specific time frames and due dates. There are a number of required activities in this lesson. The chart below provides an overview of those activities that must be submitted for this lesson. For assignment details, refer to the lesson page noted.
|Requirements||Submitting Your Work|
In Gwartney et al., read Chapter 9 "Price Takers and the Competitive Process", or, in earlier versions, "The Firm Under Pure Competition."
In Greenlaw et al,. read Chapter 8 "Perfect Competition."
|Lesson homework and quiz||Submitted via Canvas|