Chapter 1 - Demand and supply analysis: Introduction. The focus of the reading is on demand and supply analysis (microeconomics): How are prices and quantities of transactions determined? The theory of the consumer deals with how consumers make choices, and the theory of the firm is how profit-maximizing firms make choices. | Chapter 1 Demand and Supply Analysis: Introduction Presenter’s name Presenter’s title dd Month yyyy 1 1. Introduction Copyright © 2014 CFA Institute 2 Note to presenter: The focus of the reading is on demand and supply analysis (microeconomics): How are prices and quantities of transactions determined? The theory of the consumer deals with how consumers make choices, and the theory of the firm is how profit-maximizing firms make choices. 2 2. Types of markets Factor markets are markets for the factors of production. The factors of production are the inputs to production. Factor markets include labor markets. Goods markets are markets for the outputs of production. The outputs of production are goods and services, which may be intermediate goods and services or final goods and services. Capital markets serve as a means for providers of capital (that is, the providers or suppliers of long-term sources of funding, or savers) to exchange their capital for long-term claims on a firm’s cash | Chapter 1 Demand and Supply Analysis: Introduction Presenter’s name Presenter’s title dd Month yyyy 1 1. Introduction Copyright © 2014 CFA Institute 2 Note to presenter: The focus of the reading is on demand and supply analysis (microeconomics): How are prices and quantities of transactions determined? The theory of the consumer deals with how consumers make choices, and the theory of the firm is how profit-maximizing firms make choices. 2 2. Types of markets Factor markets are markets for the factors of production. The factors of production are the inputs to production. Factor markets include labor markets. Goods markets are markets for the outputs of production. The outputs of production are goods and services, which may be intermediate goods and services or final goods and services. Capital markets serve as a means for providers of capital (that is, the providers or suppliers of long-term sources of funding, or savers) to exchange their capital for long-term claims on a firm’s cash flow and assets (that is, debt and equity securities). Copyright © 2014 CFA Institute 3 LOS: Distinguish among types of markets. Pages 3–4 Markets are distinguished in terms of the goods or services that are traded in the market: Factor markets are markets for the factors of production. Labor markets are a type of factor market where the factor is labor. Goods markets are markets for goods and services, which may be intermediate goods and services or final goods and services Capital markets serve as a means for providers of capital (that is, savers) to exchange their capital for long-term claims on a firm’s cash flow and assets (that is, debt and equity securities). 3 3. Basic Principles and Concepts Copyright © 2014 CFA Institute 4 LOS: Explain the principles of demand and supply. Pages 412 Demand represents the willingness and ability to purchase a good or service at a given price. Supply represents the willingness and ability to offer a good or service for a given price. Note to .
