ECN 102 Lecture 5: ECON 1000 Chapter 2-3 notes
Document Summary
If the point is inside the ppf, production is inefficient b/c we are giving up more than necessary of one good. Law of demand: other things equal, as price falls, the quantity demanded rises, and as price rises, the quantity demanded falls. Reasons: common sense, law of diminishing marginal utility. Income effect and substitution effects: change in demand: when any factor that influences buying plans changes, other than the price of the good. Determinants of demand: change in consumer tastes and preferences, change in number of buyers, change in income, normal goods: when demand increases as income increases. Law of supply: other things equal, as the price rises, the quantity supplied rises and as the price falls, the quantity supplied falls.
