Lecture 3 Supply and Demand and Consumer Choice

Lecture 3 Supply and Demand and Consumer Choice - Demand...

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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) The prices of related goods Income Population – size, ethnicity or age structure/distribution Preferences – attitudes towards goods and services Expected future prices & income
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A Change in Demand Price of Related Goods Substitutes — goods used in the place of another good Complements — goods used in conjunction with another good Technical definition Substitutes Complements ! Q i ! Q i ! P j ! P j What Happens to Demand if the price of a substitute good increases? A complement?
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A Change in Demand Income Normal Goods — demand increases as income increases Inferior Goods — demand decreases as income increases Neutral Goods – no income effect on demand curve
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Supply What determines selling plans? The price of the good (a move along the curve) Main factors bring changes in supply (a shift of the curve) Price of Productive Inputs/Factors
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This note was uploaded on 04/04/2012 for the course ECON 010 taught by Professor Stein during the Fall '07 term at UPenn.

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Lecture 3 Supply and Demand and Consumer Choice - Demand...

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