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11 Wednesday, September 20, 2006

11 Wednesday, September 20, 2006 - Wednesday Microeconomics...

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Wednesday, September 20, 2006 Microeconomics CONSUMER’S INCOME OR WEALTH P 1. Suppose Income , Demand Normal 2. Suppose Income , Demand Good P0 1. Suppose Income , Demand Inferior 2. Suppose Income , Demand Good D1 (Ex. Ramon D Noodles) Q0 Q1 Q PRICE OF OTHER GOODS SUBSTITUTE is a good that can be used in a place of another. (Ex Pepsi and Coke) COMPLEMENT is a good that goes together or with another good. SUBSTITUTES “Tide” P Price of “Surf” increases causes the demand of “Tide” to go up. If good A and good B are substitutes. Then an increase in the price of good A will increase the demand for B. D1 D Q
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Wednesday, September 20, 2006 COMPLEMENTS “Hotdogs” P Price of “hotdog buns” increases the demand of hotdogs goes down. If good A and good B are complements and increases in the price of good A will decrease the demand for good B. P0 D1 D Q1 Q0 Q EXPECTATIONS ABOUT THE FUTURE “Computers” P Expected Future Price , Demand Expected Future Price , Demand Expected Future Income , Demand
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