Macro 3 - Chapter 3 Basic Elements of Supply and Demand The...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 3: Basic Elements of Supply and Demand The Demand Schedule -There exists a definite relationship between the market price of a good and the quantity demanded of that good, other things held constant. -Law of downward-sloping demand: When the price of a commodity is raised, buyers tend to buy less of the commodity. Similarly, when the price is lowered, quantity demanded increases. -Quantity demanded tends to tell as price rises for two reasons: 1. Substitution effect, which occurs because a good becomes relatively more expensive when its price rises. 2. The income effect occurs when a price goes up, I find myself somewhat poorer than I was before Market Demand -The market demand represents the sum of all individual demands Factors Affecting the Demand Curve -Average income: As people’s income rises, they buy more things -Size of the market -Prices of related goods: Lower gasoline prices raises demand for cars -Tastes -Special Influences: Umbrella in Seattle, but not in Phoenix Shifts in Demand
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern