MGEB01H3 Lecture Notes - Lecture 7: Demand Curve
Document Summary
Now we are going to review the basics of demand and supply (which was taught in introductory micro. Let"s skip how individual demand and supply are determined for now, and directly jump to market demand. The market demand) is typically downward sloping in important: it is a tradition in economics to draw the vertical axis,even though it is the independent (variable. As we will show in later lectures, market demand depends on income as well, so actually we should write: The market supply q is increasing in p. again, the axes are in production costs will shift the supply curve. (similar to market demand, ) actually depends on production, such as labor wage. This will be clear to us later on. ) The market demand and supply determines the equilibrium price p. A rightward shift in supply will decrease the equilibrium price and increase the equilibrium quantity.
