ECON 1201 Lecture Notes - Lecture 6: Inverse Relation, Critical Role, Complementary Good
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ECON 1201 Full Course Notes
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Econ 1201 lecture 6 supply and demand principles. Price: prices are determined by the interaction of demand and supply, demand: value, supply: cost, prices reflect and are signals relating to consumer"s validation and supplier"s cost structure, relative scarcity. Demand: the demand curve shows the relationship between the quantity demanded of the good or service of at various prices, first law of demand: holding everything else constant, the lower the price, the higher the quantity. Why are p and qd negatively related: real income effect and substitution effect. Individual level: demand curve summarizes how consumers use/value goods and services given their preferences and ability to substitute, overall market level. Income/wealth: taxes and subsidies, population, prices of substitutes, tastes, expectations, quality, prices of complements. Demand shifters: what makes people buy more/less of a good at any given price or willing to pay more/less of the same quantity. Income/wealth: taxes and subsidies, population, prices of substitutes, tastes, expectations, quality, price of complements.