Chapter Summary

This chapter covers the essentials of supply and demand. The analysis includes demonstration problems that help the students work through the theory. Price ceilings and price floors, as well as the effects of excise and ad valorem taxes, are also covered. For the usual managerial economics student, this chapter is a review of material covered in previous courses. If your students have had an excellent class in micro-theory, this chapter can easily be left to them to read on their own. However, if their previous classes in economics were either a long time ago or several of the students have not had a previous course in economics, this chapter will serve as a complete coverage of the basics of supply and demand.