ec-14 - A Closer Look… a Preferences i As preferences...

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9/18 I. Warm up notes a. Demand is not a quantity b. Demand inc/dec relative to other goods II. Review a. Demand (d): is a whole schedule b. Quantity Demand (Qd): is amount bought at a given price c. Change in (Qd): a move along same Demand Schedule i. Caused by in Price d. Example: Jimmy’s Faux Pas i. Proposed increase in gas tax (1976) 1. Harm consumers? a. Not really i. Tax will raise price but… 1. ↑ gas P wil ↓ Demand Gas a. Which will ↓ P Gas i. Logical fallacy 2. ↑P gas → ↓ Q of Gas bought III. Change in Demand (∆ D) a. Shift of entire schedule b. More/ less bought at every price c. Caused by change in “other things constant” IV.Show ∆ Qd on Graph
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a. ↓ P→ ↑ Qd b. ↑ P→ ↓ Qd V. Show ∆ D on Graph a. ↑ Demand b. ↓ Demand VI.Demand Shifters a. T astes/ Preferences b. I ncome
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c. P rice of Substitutes d. P rice of Compliments e. E xpectations of Buyers about price in future f. N umber of Consumers VII.
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Unformatted text preview: A Closer Look… a. Preferences i. As preferences strengthen 1. ↑ D ii. As preferences weaken 1. ↓ D b. Income- of all consumers in the market i. ↑ Income 1. ↑ D 2. Normal good a. Consumption rises when income rises 3. Inferior good a. Consumption falls when income rises ii. ↓ Income 1. ↓ D c. Price of substitutes i. Satisfy the same want 1. ↑ P of subs → ↑ D of other good 2. ↓ P of subs → ↓ D of other good d. Complements i. Jointly consumed 1. ↑P of compliment → ↓D of other good 2. ↓ P of compliment → ↑ D of other good e. Expectations of Buyers i. About the price in future 1. Expect ↑ P future → ↑ D now 2. Expect ↓ P future → ↓ D now f. Number of consumers i. Don’t over use this ii. Changes in population 1. Growth in population → Increase Demand a. ↑ # Consumers → ↑ D...
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ec-14 - A Closer Look… a Preferences i As preferences...

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