Being equal how price affects quantity of goods

Info icon This preview shows pages 11–19. Sign up to view the full content.

being equal, how price affects quantity of goods demanded. Other Things: Anything that potentially determines the buyers’ demand for a good, other than the good’s price. Questions: What are these “other things”?
Image of page 11

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

GESB 1006: Economics of Everyday Life University of Macau Demand Curve Shifters Number of Buyers: Increases in # of buyers Increases in quantity demanded at each price - It shifts the demand curve to the right. (Demand curve shifts outward.) Decreases in # of buyers decreases in quantity demanded at each price - It shifts the demand curve to the left. (Demand curve shifts inward.)
Image of page 12
GESB 1006: Economics of Everyday Life University of Macau Demand Curve Shifters: Number of Buyers Suppose the number of buyers increases. Then, at each P, Q d will increase (by 5 in this example). $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 0 5 10 15 20 25 30 P Q
Image of page 13

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

GESB 1006: Economics of Everyday Life University of Macau Demand Curve Shifters Income It seems that people demand more of a good if they have higher income. This is not necessarily true. Two types of goods: Normal vs Inferior Normal Goods: Other things equal, an increase in income leads to an increase in the demand. Inferior Goods: Other things equal, an increase in income leads to a decrease in the demand. Example: Instant Noodles.
Image of page 14
GESB 1006: Economics of Everyday Life University of Macau Demand Curve Shifters Price of Related Goods Here we consider the prices of two types of related goods. Price of Substitutes Two goods are substitutes if an increase in the price of one leads to an increase in the demand for the other. Example: Pizza and Burgers An increase in the price of pizza increases the demand for burger, shifting burger demand curve to the right. Other examples: Coke vs Pepsi; Laptops vs Tablets; PlayStation vs Xbox; and so forth.
Image of page 15

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

GESB 1006: Economics of Everyday Life University of Macau Demand Curve Shifters Price of Related Goods Here we consider the prices of two types of related goods. Price of Complements Two goods are complements if an increase in the price of one leads to a decrease in the demand for the other. Example: Computer and Software If price of computers rises, people buy fewer computers, and therefore less software; Software demand curve shifts left Other examples: College tuition and textbooks; cheese and bread; and so forth.
Image of page 16
GESB 1006: Economics of Everyday Life University of Macau Demand Curve Shifters Tastes Anything that causes a shift in tastes toward a good will increase demand for that good and shift its demand curve to the right Example: When research suggests that certain superfood (e.g. garlic and so forth) reduces the occurrence of cancer, demand of these superfood shifts outward.
Image of page 17

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

GESB 1006: Economics of Everyday Life University of Macau Demand Curve Shifters Expectations about the Future Expected increases in future income induce increases in current demand.
Image of page 18
Image of page 19
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