1. Economics and Business
Chapter 2 – 2
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2. Review What do the supply and demand curves look like?
What affects the demand curve?
What affects the supply curve?

3. Learning Objectives Describe capitalism and socialism
Discuss private property rights and economic development
Discuss the concept of GDP (gross domestic product).
Explain fiscal and monetary policy
Discuss the concept of the unemployment rate
Discuss the concepts of inflation and deflation.
Explain other key terms including: supply; demand; equilibrium price; monopoly; recession; depression.
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4. Economics Supply & Demand
Equilibrium price – price at which consumers are willing to purchase everything a business is willing to make
No surplus
No shortage
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5. Supply and Demand Curve Changes
Shift right in the demand curve
Results in higher prices and greater quantity S
Price D’ D
Quantity

6. Supply and Demand Curve Changes
Shift left in the demand curve
Results in lower prices and less quantity S
Price D D’
Quantity

7. Supply and Demand Curve Changes
Shift right in the supply curve
Results in lower price and greater quantity S S’
Price D
Quantity

8. Supply and Demand Curve Changes
Shift left in the supply curve
Results in higher price and less quantity S’ S
Price D
Quantity

9. Economics Supply & Demand
Discuss affects of
Increase in corporate taxes
Change in consumer tastes
Automation
Promotion
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10. Economics Supply & Demand
Consider the market for lemonade.
What happens when:
There is a heat wave
The price of sugar goes up
The cost of a can of soda falls
There is a baseball game on the street
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11. Competition Perfect competition Monopolistic competition
Many providers
Standard product
Many consumers
Monopolistic competition
Differentiated product

12. Competition Oligopoly Monopoly Natural monopolies Legal monopolies
Few providers
Many consumers
Monopoly
One provider
Natural monopolies
Legal monopolies