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Unformatted text preview: Comm 295 Supply and Demand (2.1-2.4) SUPPLY AND DEMAND 2.1 DEMAND Demand : the quantity of a good or service that consumers demand depends on price and other factors- Factors: consumer income, prices of other goods, tastes, information about product, government regulations The Demand Curve Quantity demanded : the amount of a good that consumers are willing to buy at a given price Demand curve : shows the quantity demanded at each possible price, holding constant the other factors- Vertical axis is price p- Horizontal axis is quantity Q Law of demand : consumers demand more of a good if its price is lower – demand curves slope downward- A change in in any factor other than price of the good causes a shift of the demand curve- A change in price of the good causes a movement along the demand curve Demand function : shows effect of all relevant factors on the quantity demanded Q = D(p1,p2,Y)- Corresponds to demand curve- Overall demand for a good is composed of the demand of many individual consumers...
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This note was uploaded on 12/07/2011 for the course COMM 295 taught by Professor Ratna during the Winter '09 term at UBC.
- Winter '09