Unformatted text preview: As your income increases you inevitably spend more on certain goods:- luxury items, clothing, Very well defined in the spectrum of Broad Markets Are there inferior goods? In Narrow markets yes, but not in broad markets… Debate about Addictive substances, how does your buying pattern change toward addictive substances as your income goes up? Changes in Prices Substitutes As the Price of A goes up, the quantity of B goes up instead ( apples and pears) Complements As the Price of A goes up, the quantity of B goes down Giffen Goods As the Price of A goes up, the quantity of A goes up--- (not going to stress a lot) Deriving a demand curve...
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- Spring '08
- Microeconomics, indifference curves, Inferior Goods, addictive substances, budget constraint MUa, buying pattern change