Chapter 2 Market Forces: Demand and Supply

Learning Objectives:

1. Explain the laws of demand and supply, and identify factors that cause demand and supply to shift.

2. Calculate consumer and producer surplus, and describe what they mean.

3. Explain price determination in a competitive market, and show how equilibrium changes in response to changes in determinants of demand and supply.

4. Explain and illustrate how excise taxes, ad valorem taxes, price floors, and price ceilings impact the functioning of a market.

5. Apply supply and demand analysis as a qualitative forecasting tool to see the “big picture” in competitive markets.

Demand

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