ch3 - Chapter 3 Demand Supply and Price OUTLINE Quantity...

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Chapter 3 – Demand, Supply and Price OUTLINE Quantity demanded Quantity supplied Terminology Equilibrium Exercise 1 The Laws of Supply and Demand Exercise 2 Exercise 3 Quantity demanded Quantity demanded is amount of goods that buyers are willing and able to buy in a given time period ( flow ) rises if, ceteris paribus (other things constant) 1. price of the good falls ( law of demand ) 2. price of a substitute good rises e.g. pepsi and coke, butter and margarine 3. price of a complement good falls e.g. hardware and software, cars and gas 4. average household income rises provided the good is normal e.g. entertainment, owned housing falls provided the good is inferior e.g. public transit, rented housing Maria Gallego 1 of 13
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Quantity demanded Quantity demanded rises if, ceteris paribus (other things constant) 5. income is redistributed to groups most likely to buy a good (provided good is normal) e.g. subsidized tuition 6. tastes change in favour of the product e.g. healthy foods 7. population increases 8. the price is expected to rise tomorrow …fall if, the above changes are reversed Quantity supplied Quantity supplied …is the amount of goods that sellers are willing and able to sell in a given time period ( flow ). …rises if,
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This note was uploaded on 01/17/2012 for the course ECONOMICS 120 taught by Professor Mesta during the Fall '10 term at Wilfred Laurier University .

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ch3 - Chapter 3 Demand Supply and Price OUTLINE Quantity...

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