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chapter 4 - Demand What determines buying plans-The price...

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Demand What determines buying plans? -The price of the good (a move along the curve) -Main factors bring changes in demand (a shift of the curve) i. The prices of related goods ii. Income iii. Population, (size, ethnicity, or age structure/distribution) iv. Preferences, (attitudes towards goods and services) v. Expected future prices and income The demand of a good is a function of its own price (inverse), income, prices of other goods (Px, Py), and utility. These four items can affect the private demand of individual goods. In addition to these factors, population (sums and structure), income distribution, and expected income can affect the market demand of a good. How income affects demand:
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Most of the goods and services that we know are known as normal. Inferior goods are generic goods (pharmaceuticals, etc.) because there are better, brand-name items. Public transportation is also an inferior good, because if you are very poor then you can not afford the alternative: a car. Neutral goods have no income effect. Salt or basic spices can
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