The first reading assignment is pp. 59-78. If you have taken Macroeconomics, then this material will review what you already know.

Note the author's discussion of "other things constant" on p. 61-62.

You should know the difference between a shift in demand versus a change in quantity demanded. When a demand curve shifts, some factor other than the price of the product itself changes and causes the demand curve to assume a new position on a graph. These shift factors include a change in consumer tastes or preferences, a change in household income, or a change in price of a related product, such as a substitute or a complement. A demand shift may be an increase in demand such that the new demand curve is located to the right of the original curve, or it may be a decrease in demand, in which case the shift is to the left of the original curve. Alternatively, if only the price of the product itself changes, such as a company lowering its price in order to increase its sales level, then there is no need for a new demand curve. There will just be a new price-quantity combination on the original demand curve. Study the graph at the top of p. 63.

You should be able to convert a demand schedule (i.e., a table with two columns, a price column and a quantity demanded column) to a demand curve. Note that it's called a demand curve even if it's a straight line. Straight line demand curves are known as linear demand curves and are used for convenience. Study at the graph at the top of p. 64.

The individual demands are added together to form a market demand curve. See the graph on p. 65.

Be sure to study the reminder summary of things to know about demand. This is located at the top of p. 67.

Review the law of supply on p. 68 and note the slope of a typical supply curve at the top of p. 69. A supply curve has a positive slope because there is a direct, positive relationship between price and quantity supplied. Make sure you understand the difference between a shift in supply and a change in quantity supplied. This distinction is similar to the one discussed above for demand curves. In order to have a shift in supply so that the supply curve assumes a new position on a graph, either to the right if it is an increase in supply or to the left if it is a decrease, then some factor other than just a price change in the product itself must occur. These shift factors include changes in technology, changes in the number of firms in an industry, and changes in the prices of related goods. Regarding the supply curve, the term related goods refers to the prices of alternative goods a firm could produce. For example, a corn farmer might decide to plant more soybeans and less corn if the market price of soybeans went up. See the graph on the bottom of p. 69.

At the bottom of p. 70, notice the cumulation of the individual firm supply curves to form a market supply curve.

You will also learn how to use a supply schedule to graph a supply curve. As on the demand side, a supply schedule is just a table with two columns, a price column and a quantity supplied column.

Study the supply summary of things to remember on the top of p. 72.

Now look at the dynamic laws of supply and demand at the top of p. 73.

Note the interaction between supply and demand in the graph at the top of p. 74.

Read the author's discussion of equilibrium on pp. 74-75. Equilibrium in a market means the tendency of the market forces of supply and demand to reach a position of balance, or equilibrium. This position of balance occurs where the quantity demanded equals quantity supplied. There is a certain market price and quantity associated with equilibrium. In reality, markets are dynamic. They are constantly changing. In order to better understand the forces of supply and demand, graphs are used. These graphs provide illustrations of the forces of supply and demand as they interact with each other and result in a market clearing or equilibrium price.

Study the shifting supply and demand graphs at the bottom of p. 76.

Look over the chapter summary on p. 78.

You have just finished your first reading assignment.