1、Unit TwoText:Demand and Supply（需求与供给）1.Key words2.How are prices determined?3.Demand schedules and curves4.Supply schedules and curves5.Changes in demand6.Changes in supply7.Translate the following into Chinese8.Questionsfree enterpriseprice mechanismmake a profiteffective demandlaw of demandlaw of
2、supplydemand scheduledemand curvevertical axishorizontal axissupply schedulesupply curvemarket mechanismequilibrium pricerelated goodsconsumer tastesFuture expectationschanges in demandchanges in supply2.1 Price mechanism2.2 Demand and effective demand2.3 Law of demand and law of supplyIf an economy
3、 runs on the lines of the purely competitive market of free enterprise,then what is produced and the prices at which the products are sold depend upon the choices and decisions made by consumers and producers.The price mechanism is the process by which prices rise and fall as a result of changes in
4、demand and supply,and thereby acts as a signal to producers to guide them on their production plans.If our economy were entirely competitive and there were no restrictions at all,then the market forces,or price mechanism,would operate freely.The only things that would be produced would be those good
5、s for which consumers were willing to pay sufficient to make it worthwhile for the producers to put them on the market.The demand for a product and the price at which it can be sold indicate to the producer the best way to allocate resources in order to make a profit.Demand means the quantity which
6、buyers are willing to purchase at a given price over a given period of time.Effective demand means a desire to obtain an article accompanied by the ability and willingness to pay for it at the price asked.In economics,when we speak of demand,we are usually referring to effective demand.Law of demand
7、 Buyers are likely to buy more of an item as the price falls.Law of supply As prices rise,sellers would like to sell more and will,if it is possible,offer a larger quantity for sale.3.1 Demand schedules3.2 Demand curvesPrice(cents/kg)Price(cents/kg)QuantityQuantitydemanded(kg)demanded(kg)Price(cents
8、/kg)Price(cents/kg)QuantityQuantitydemanded(kg)demanded(kg)1070 503020 6060 2030 50 701040 4080NilThe price is shown on the vertical axis,while quantity is shown on the horizontal axis.This is the conventional way of drawing a demand and supply graph.As prices fall,a larger quantity of a good is dem
9、anded.The typical demand curve slopes down from left to right.This indicates that consumers buy more of a good at lower prices and less at higher prices,but at very low prices demand does not necessarily increase.This is sometimes called an expansion or contraction,or a movement along the curve.4.1
10、Supply schedules4.2 Supply curves4.3 Equilibrium price Price(cents/kg)Price(cents/kg)QuantityQuantitysupplied(kg)supplied(kg)Price(cents/kg)Price(cents/kg)QuantityQuantitysupplied(kg)supplied(kg)80100 406070 9030 5060 80 204050 701030As prices rise,a larger quantity of a good is supplied or sold.The
11、 typical supply curve slopes down from right to left.This indicates that suppliers or sellers supply or sell more of a good at higher prices and less at lower prices.This is called a movement along the curve.A compromise between how much and at what price the seller decides to sell and the consumers
12、 plans to buy must be arrived at.This is called the equilibrium price and is the price at which the buyer is prepared to buy the quantity which the seller is prepared to sell at that price,so that the market is cleared and there is no surplus and no shortage.5.1 Influences which can change demand fo
13、r goods and services5.2 Changes in demandPrice received for the itemPrices of related goodsChanges in consumer tastesPrices of all other goods and servicesThe income of the consumerFuture expectationsDemand changes simply because price is changing,but none of the other factors which affect the consu
14、mers buying have changed.A change in the price of a good results in a movement along an existing demand curve.Price has remained unchanged but there has been a change in demand caused by factors other than price.The demand curve could shift to the left or right if there is a change in any of these c
15、onditions other than price,influencing people to buy less or more of a commodity even if the price remains unchanged.6.1 Influences which can change supply for goods and services6.2 Changes in supplyThe price received for the itemThe cost of producing the itemTaxes imposed which raise the items mark
16、et price to consumersSubsidies awarded to producers,which reduce the costs of productionPrices of other goodsFuture expectationsChanges in supply due to the nature of the goodIn the case of supply,any change of price results in a movement up or down the existing supply curve,if no other changes occu
17、r to affect supply.Any change in the conditions other than market prices causes a shift in the supply curve.(1)The price mechanism is the process by which prices rise and fall as a result of changes in demand and supply,and thereby acts as a signal to producers to guide them on their production plan
18、s.(2)The only things that would be produced would be those goods for which consumers were willing to pay sufficient to make it worthwhile for the producers to put them on the market.(3)When speaking of demand for a commodity,economists mean the quantity which buyers are willing to purchase at a give
19、n price over a given period of time.(4)Somehow these two conflicting desires of buyers and sellers must be brought into some kind of agreement,or there will be a surplus of highly priced goods which buyers are not willing to buy,or a shortage of goods because sellers will not produce them for sale a
20、t a low price.(5)This is called the equilibrium price and is the price at which the buyer is prepared to buy the quantity which the seller is prepared to sell at that price,so that the market is cleared and there is no surplus and no shortage.(6)If the other conditions which affect demand should cha
21、nge,and not the price,then our graph will look different because we have what is called a shift in the curve.(7)The supply curve can move leftwards if,for example,costs of production rose,with consumers being unwilling to pay more for the item and suppliers unwilling to supply as much at the same price.(1)What factors need to be considered in fixing the price for a new product?(2)What causes a shift in the market demand curve?(3)What causes a shift in the market supply curve?(4)How does the factor of future expectations influence demand and supply?
