Homework Assignment and Progress Assignment

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Module 3 Lecture Notes

Demand, Supply, and Equilibrium; Elasticity and Consumer Behavior

When applying supply and demand analysis to the real word, do not forget that several markets may be operating simultaneously. For example, the college includes a market in which students pay tuition, a market for textbooks, a several labor markets for the staff and so on. Remember to clearly state the market and then ask: Which good or service is being bought and sold? Who are the suppliers? Who are the demanders? Within one institution such as a college there will be several markets.

It is important to understand the concept of elasticity and its importance in business and government policy decisions. Consider the following examples:

Disneyland: why is admission less for those who can show a Southern California driver’s license? Airline travel: why do airlines charge less for a Saturday night stay? Renting a house: when property taxes increase, does the landlord or tenant pay it?

Consumer surplus is an important concept to understand. For example, in purchasing a used car advertised in the newspaper, a buyer will not reveal the prices at which he or she will purchase, nor will the seller reveal the prices at which he or she will sell. The agreed-upon price may provide a consumer surplus to the buyer.

Required Videos:

Please review the following videos:

· Consumer Surplus Introduction

· Total Consumer Surplus

· Producer Surplus

· Market Equilibrium

· Changes in Market Equilibrium

· Price Elasticity of Demand

· Elasticity of Supply

Required Web Resources:

Please review the following articles:

· Bezawada, R., & Pauwels, K. (2013). What Is Special About Marketing Organic Products? How Organic Assortment, Price, and Promotions Drive Retailer Performance. Journal Of Marketing, 77(1), 31-51 .