COMM 220 Study Guide - Final Guide: Business Cycle, Liquidity Preference, Adverse Selection
Document Summary
Real price = (cpibase / cpicurrent) * nominal pricecurrent. Change in supply - shift in the supply curve. Change in quantity supplied - movement along the supply churve. Law of supply : if p increase, qs increase. Demand : qd = a - bp b = slope = (-change q) / (change p) Demand: if a decrease - shift left of demand curve, if a increase - shift right of demand curve, if b increase - curve becomes flatter, if b decrease - curve becomes steeper. Change in demand - shift in the demand curve. Change in quantity demanded - movement along the demand curve. If demand increase when income increase - normal good. If income slope is negative or when demand drops as consumer income rises - inferior good. * as price goes up, you are more sensitive to the price so the demand becomes more elastic* Price elasticity of supply (es) = (change qs)/(change p)*(p/q)
