eco2 - how much the market economy makes. inferior goods-...

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1/14/08 Supply and Demand Supply Demand Always seller Always buyer Not always a company Not always individual factors of production* Demand -buyers (foil-wrapped ice cream cones) Law of Demand- Ceteris Paribus, if the price of a good or service increases, the quantity demanded cannot increase. Ceteris Paribus- all other things constant This is because an increase or decrease in the price of a good will only affect the supply curve. Example: heart transplant. It does not matter if the doctor comes in on the day of your surgery and tells you it will cost you an extra $25,000 for the operation, you are still going to get it. You are not going to get up and walk out. Four Sources of Shift in the Demand Curve 1) Consumer income-
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Unformatted text preview: how much the market economy makes. inferior goods- goods that you buy less of as you make more money normal goods- goods that you buy more of as you make more money Example of inferior goods: hamburger meat, bus passes, cubic zirconia, and spam *Remember for tests 2) Price of related goods- Substitutes- replace a previous good Complements- go well with another good 3) Consumer tastes and expectations- What the buyer likes or expects from a good or service 4) Number of consumers- An increase in the number of consumers, will cause the demand curve to shift right. In the same way, a decrease in the number of consumers will cause the demand curve to shift left....
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This note was uploaded on 04/18/2008 for the course ECO 2023 taught by Professor O'gorman during the Spring '08 term at South Florida Community College.

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