disc1 - DISCUSSION SECTION 1 Demand and Supply The Law of...

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Unformatted text preview: DISCUSSION SECTION 1 Demand and Supply The Law of Demand says that a higher price of a good, other things equal (ceteris paribus), leads people to demand a smaller quantity of the good. (So, demand curve is downward sloping) Shifts of the demand are caused by: 1. Changes in income (normal, inferior) 2. Changes in prices of related goods (substitutes, complements) 3. Changes in tastes 4. Changes in number of buyers 5. Changes in expected future prices ------------------------------------------------------------------------------------------------------------ The Law of Supply says that as price rises, the quantity supplied rises. Shifts of the supply are caused by: 1. Changes in resource prices 2. Changes in technology 3. Changes in taxes or subsidies 4. Changes in expectations 5. Weather ------------------------------------------------------------------------------------------------------------ Equilibrium : Q d =Q s We have a surplus (or excess supply ) of a good when the quantity supplied exceeds the quantity demanded....
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This note was uploaded on 08/08/2008 for the course ECON 301 taught by Professor Hansen during the Spring '08 term at Wisconsin.

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disc1 - DISCUSSION SECTION 1 Demand and Supply The Law of...

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