1. Chapter 3 Demand, Supply, and Market Equilibrium 1 Graphs and Tables Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Relationships Two variables have a positive (or direct) relationship when they both move in the same direction. – I.e. they both increase or decrease together. Two variables have a negative (or inverse) relationship when they both move in opposite directions. – I.e. when one variable increases (decreases), the other variable decreases (increases). 2

3. 3 Market Demand: the demand for the entire market is found by adding the individual demand curves (also called “horizontal summing”).