1. Opportunity Cost Question
You won a free ticket to see an Eric Clapton concert (which has no resale value). Bob Dylan is performing on the same night and is your next-best alternative activity. Tickets to see Dylan cost $40. On any given day, you would be willing to pay up to $50 to see Dylan. Assume there are no other costs of seeing either performer. Based on this information, what is the opportunity cost of seeing Eric Clapton?
(a)$0, (b) $10, (c) $40, or (d) $50.

2. Supply and Demand
Chapter 3

3. Competitive Market
Lots of buyers and sellers dealing in identical goods.

4. Catherine’s Demand Curve

5. Market Demand as the Sum of Individual Demands

6. Shifts in the Demand Curve

7. Shift Factors for Demand
Income.
Prices of related goods (substitutes and complements).
Tastes/Preferences.
Expectations.
Number of buyers.

8. Shifts in the Demand Curve versus Movements along the Demand Curve

9. Market Supply as the Sum of Individual Supplies

10. Market Supply as the Sum of Individual Supplies

11. Shifts in the Supply Curve

12. Shift Factors for Supply
Input prices.
Technology.
Weather.
Expectations.
Number of sellers.

13. The Equilibrium of Supply and Demand

14. Markets Not in Equilibrium

15. A Three-Step Program for Analyzing Changes in Equilibrium
Decide whether the event shifts the supply or demand curve (or perhaps both).
Decide in which direction the curve shifts.
Use the supply-and-demand to see how the shift changes the equilibrium price and quantity.

16. How an Increase in Demand Affects the Equilibrium

17. How a Decrease in Supply Affects the Equilibrium

18. A Shift in Both Supply and Demand