ECON 208 Chapter Notes - Chapter 3: Ceteris Paribus, Independent Goods, Inferior Good

• School: McGill University
• Department: Economics
• Course: ECON 208
• Professor: Paul Dickinson

Document Summary

What do markets do: determine prices, allocate resources to the production of the many goods and services, coordinate the independent decisions of huge numbers of people adam. Quantity demanded: total that consumers desire to purchase/t, qd is the dependent (or endogenous) variable, main independents (or exogenous) variables in the d function are f (p, Po, y, preferences, expectations, population, weather, #: p= own price (negatively related, po= price of other goods. Independent goods (unrelated: y= average household income, normal goods (positively related, no relationship. Inferior goods (negatively related: preferences= tastes & preferences, expectations about the future (e. g. future prices, population, or number of demanders, weather: e. g. If the weather gets colder, the demand for heating increases etc. Quantity supplied: the q of a product firms desire to sell in some time period= quantity supplied, not necessarily the quantity actually sold, qs is the dependent (or endogenous) variable. Independent (or exogenous) variables in the supply function are f(p,