Market Definition
Market Definition
Market Definition
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Supply and Demand<br />
Where do the curves come from and what do they represent?<br />
• Demand<br />
• Supply<br />
− Aggregate reservation prices of the market. What consumers are willing to pay.<br />
− How much consumers will buy at a particular price<br />
− Linear Demand: Qd = a - b P<br />
− Isoelastic Demand: ln(Qd) = a - b ln(P)<br />
− Aggregate marginal cost curves of an industry<br />
− How much will producers provide at a particular price<br />
− Linear Supply: Qs = c + d P<br />
− Isoelastic Supply: ln(Qs) = c + d ln(P)<br />
Midterm Review 4 10/06/04
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