ECON 208 Lecture 3: Demand, Supply and Price

• School: McGill University
• Department: Economics
• Course: ECON 208
• Professor: Irakli Japaridze

Document Summary

Demand can be defined as the quantity of a specific good or service that consumers are willing to buy at a given time at a given price. The total amount that consumers desire to purchase in some time period is called the quantity demanded of a product. Quantity bought (or exchanged) refers to actual purchases. Quantity demanded is a flow, as opposed to a stock. A basic hypothesis is that ceteris paribus- the price of a product and the quantity demanded are negatively related. There are usually several products that can satisfy any given want or desire. A reduction in the price of a product means that the specific desire can now be satisfied more cheaply by buying more of that product. Normal goods are goods which follow the standard demand curve, as income rises demand rises: inferior goods, inferior goods are goods where demand decreases as incomes increase.