ECON200 copy

ECON200 copy - ECON200 SCHWAB Economics the study of the...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
ECON200 SCHWAB 8/31/10 Economics: the study of the choices that individuals, business, governments, and entire societies make as they deal with scarcity and the incentives that influence and reconcile those choices. *explains our actions* 9/2/10 Chapter 4: The Market Forces of Supply and Demand Three Basic Questions: -what should we produce? -how should we produce it? -who should consume what we produce? Chapter Outline: -markets have two sets of actors -buyers – demand side of the market -sellers – supply side of the market -investigate the demand side in isolation -investigate the supply side of markets in isolation -connect demand and supply Determinants of Demand: -price of food -prices of other goods -income -tastes / preferences -demographic factors -expectations EXAMINE THE RELATIONSHIP BETWEEN EACH SUBCATEGORY AND DEMAND WHILE HOLDING THE OTHER FACTORS CONSTANT / LATER CHANGE BOTH Demand Schedule: -a demand schedule is a table that shows the relationship between the price of good and the quantity demanded → go to consumers and find out how much they will buy product Demand Curve: -a demand curve is a graph of the relationship between the price of a good and the quantity demanded → go to consumers and ask what they'll purchase / represent graphically PRICE ON VERTICAL AND QUANTITY ON HORIZONTAL AXIS Law of Demand: -the law of demand is a claim that, other things being equal, the quantity demanded of a good falls when the price of the good rises
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Market Demand Schedule: -a market demand schedule is a table that shows the relationship between the price of a good and the quantity demanded by all buyers (aggregation of all demand schedules) Increase in Quantity Demanded: -l ook at graph in lecture -move along a demand curve / a change in quantity occurs ONLY because the price has changed Increase in Demand: - look at graph in lecture -shifts to the right than there is an increase / no matter the price, demand increases Decrease in Demand: - look at graph in lecture -shifts to the right than there is a decrease / want to buy less of item for same price Normal Good: -a normal good is a good for which, other things being equal, an increase in income leads to an increase in demand -demand curve will shift to the right Inferior Good: -an inferior good is a good for which, other things being equal, an increase in income leads to a decrease in demand -demand curve will shift to the left -ex. bus tickets (low income individuals will take bus while high income will drive new cars) lottery tickets (low income individuals are more likely to buy) Substitutes and Complements: -when a fall in the price of one good reduces the demand for another good the two goods are called substitutes ex. coca cola price fell so you'll buy fewer pepsi gas online price rise so people will take public transformation -when a fall in the price of one good raises the demand for another good, the two goods are called complements ex. as price of bagels falls the demand of cream cheese rises
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/31/2011 for the course ECON 200 taught by Professor Vincent during the Spring '08 term at Maryland.

Page1 / 9

ECON200 copy - ECON200 SCHWAB Economics the study of the...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online