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Menu_31_Aug_11 - ii Inferior good b Price of related goods...

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TODAY’S MENU: Wednesday 31 August 2011 I. BUSINESS A . Practice Problems 1. Chapter 4: 1, 3-7, 10-20, 22 B. First Exam: Two weeks from Monday (19 September) II. SUBSTANCE A. How Trade Can Benefit All: An example 1. Specialization and trade according to Comparative Advantage 2. With Trade: consumption > production 3. Conclusions B. Buyers’ side of market: Demand 1. Definition 2. Not to be confused with Quantity Demanded 3. Determinant of Quantity Demanded a. Price of good (-) i. Link with Reservation Price 4. Determinants of Demand a. Income i. Normal good (+)
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Unformatted text preview: ii. Inferior good (-) b. Price of related goods in consumption i. Substitutes: Increase price (+) ii. Complements: Increase price (-) c. Tastes and preferences (+) d. Expectations i. Future price (+) ii. Future income: normal good (+); inferior good (-) e. Number of buyers (+) 5. Graphically a. Change in Quantity Demanded: movement along curve b. Change in Demand: shift of entire curve III. NEXT TIME A. Finish Chapter 4: “Supply and Demand” B. Begin Chapter 5: “Using Supply and Demand”...
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