ECON101 Lecture Notes - Lecture 6: Demand Curve, Inferior Good, Normal Good

• School: University of Alberta
• Department: Economics
• Course: ECON101
• Professor: Mesbah Sharaf

Document Summary

Chapter 3; demand(buyers) & supply(sellers: law of demand-there is a negative relation between the price and the quantity demanded, other factors kept constant. Tastes and income can also a ect quantity demanded. The change in the quantity demanded(deltaqd) is represented by a movement from one point to another, on the same demand curve. (a movement along the same curve). The change in the quantity demanded is caused by the change in the product price. The change in demand(deltad) is represented by a shift of the whole curve to the right(increase) or left(decrease). Suppose for simplicity we have only two consumers, a & b. Market demand is the horizontal(adding up all quantities by all individuals at a certain price)summation of all individual curves. This is a positive relation: pinputs(resources) increases, cost of production increases, pro t will decrease, this will encourage decreased supply. Negative relation: when taxes increase, cost of production increases, pro ts decrease, this will encourage decreased production(supply).