PAM 200 8.27 Notes - 1 st law of Demand As P increases qD...

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8/27/07 PAM 200 Economics - The study of the allocation of scarce resources Although scarce resources have changed dramatically; we study why there always are scarce resources although there is a vast difference between scarce resources in different time periods. Professor gave examples of how economics applies to everyday situations (FDA, lunch, and nyc parking example) Microeconomic Principles Ceteris Paribus Conditions Income (I) Price of related goods (Px) Tastes, or anything else that affects Demand (x) Demand Curve- Shows the relationship between price and quantity demanded
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Unformatted text preview: 1 st law of Demand: As P increases, qD decreases Income If income increases and… a. Demand increases, the good is normal b. Demand decreases, the good is inferior Price of other goods • If the price of good Y increases, and as a result the demand for good X increases the goods are substitutes (ex. gasoline and natural gas) • If the price of good Y increases, and as a result the demand for good X decreases the goods are compliments (ex. gas and SUVs)...
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