GEN BUS 310 Lecture 3: Module 3: Demand, Supply, and Market Equilibrium
8 Feb 2017
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Law of demand- the lower the price of a good, the larger the quantity consumers wish to purchase. Assume that all other factors (income, preference, etc) remains constant. Negative slope of demand curve = higher prices associated with lower quantities. Normal goods- an increase in income leads to greater consumption. Complements- two goods that tend to be consumed together, so consumption of both. Inferior goods- consumption falls when income rises goods tend to rise and fall simultaneously. Increase in the price of one good leads to a decrease in demand for the other. Substitutes- goods that can replace one another in consumption. Taste/preference- subjective feelings of consumers about the desirability of different goods. Shifts in versus movements along a demand curve. Factors are held constant to identify the influence a good"s own price has on consumer purchases. If they change, the entire demand curve shifts.
