Lecture2 - ECO100 - Introduction to Economics Economics...

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ECO 100Y Introduction to Economics Lecture 2: Demand and Supply © Gustavo Indart Slide 1
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The Quantity Demanded ± Quantity demanded of a commodity is the amount at consumers plan to buy in a given period of time at that consumers plan to buy in a given period of time at a particular price ± of a commodity depends on many other factors besides its own price rices of other commodities ¾ Prices of other commodities ¾ Level and distribution of income ¾ Size of the population ¾ Tastes or preferences of the consumers © Gustavo Indart Slide 2 ¾ Expectations about the future
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he Demand for a Commodity The Demand for a Commodity ± Demand for a commodity refers to the entire relationship between the quantity demanded and the price of a commodity, holding all other factors p y, g constant ± The demand for a commodity is shown by the demand schedule and/or the demand curve © Gustavo Indart Slide 3
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he Demand Schedule The Demand Schedule Demand Schedule for Apples The d emand schedule for a commodity e dSc edue o ppes Price (lb.) Tons per Week shows the different quantities demanded when only the price 19 26 of the commodity is allowed to change 34 4 3 52 © Gustavo Indart Slide 4 6 1
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he Demand Curve The Demand Curve aphs the relationship between ± A demand curve graphs the relationship between the quantity demanded of a commodity and its own price ± A shows the maximum price that consumers are willing to pay for the last unit bought of the commodity © Gustavo Indart Slide 5
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he Demand Curve for Apples The Demand Curve for Apples 5 6 7 3 4 Price ($) 1 2 0 123456789 Quantity (tons/week) © Gustavo Indart Slide 6
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he Law of Demand The Law of Demand ± Law of Demand states that, other things being equal, the higher the price of a commodity, the lower is the quantity demanded ± The is not an absolute law it is the ost likely outcome most likely outcome ± The is shown by the negative slope of the demand curve © Gustavo Indart Slide 7
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hift of the Demand Curve Shift of the Demand Curve ± The position of the demand curve changes if any of p the following occurs: ¾ A change in the price of some other commodity ¾ A change in income ¾ A change in the distribution of income ¾ A change in population ¾ A change in tastes or preferences change in expectations about the future © Gustavo Indart Slide 8 ¾ A change in expectations about the future
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A Change in the Price of Some Other Commodity ± Direction of the shift depends on whether the other commodity is a substitute or a complement ± A is a commodity that can be used in place of another commodity (e.g., pears and apples) ± A is a commodity consumed in njunction with another commodity (e g hamburgers conjunction with another commodity (e.g., hamburgers and french fries) © Gustavo Indart Slide 9
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An Increase in the Price of a Substitute After the increase in the price of a substitute, at price P 1 the quantity P demanded increases to Q 2 h t i t t P 1 What is true at price P 1 is also true at any other il l d Initially, at price
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This note was uploaded on 01/19/2010 for the course ECONOMICS ECO100 taught by Professor J.l.carr during the Fall '08 term at University of Toronto- Toronto.

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Lecture2 - ECO100 - Introduction to Economics Economics...

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