Lecture Slides 8 - Overview Lecture 8 Last class Shift in...

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Overview ( Lecture # 8) Last class: Shift in Demand curve Today: Shift in Demand Curve cont.. Supply curve Shift in supply curve Equilibrium 11/30/16 1 Econ 130_ Fall 2016 _ C Dhakal
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11/30/16 Econ 130_ Fall 2016 _ C Dhakal 2 Change in Demand Curve Q) What can change the quantity demand as per clause of Law of demand, “ other things being equal”? All conditions- other than price – that affect demand are considered o be constant under the “ other things being equal” clause of the law of demand PRICE! M ovement along the Demand curve If price of beef increases from $ 3 to $ 4.50 quantity demand decreases from 3 to 2
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Other factors that shifts the demand curve 1) Income: Normal goods : a goods for which, other things being equal, an increase in income leads to an increase in demand. Inferior goods : a goods for which, other things being equal, an decrease ( increase) in income leads increase ( decrease) in demand 2) Price of related goods: Substitute goods : two goods for which increase in the price of one leads to increase in the demand of other goods ( eg. Ice cream and frozen yogurt) Complementary goods : Two good for which an
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