ECON 1BB3 Chapter 4: 4- Supply and Demand- How the Market works

• School: McMaster University
• Department: Economics
• Course: ECON 1BB3
• Professor: Bridget O' Shaughnessy

Document Summary

Inferior good increase money = decrease demand b: price of related goods, substitutes increase of price of good a = increase demand for good b, complements increase price of good a = decrease demand for good b, tastes a, expectations. Government can attempt to shift the demand curve left through public service announcements, mandatory health warnings on packages, prohibition of advertising etc (via shift of d curve) Gov"t can raise the price of cigarettes via tax: increase the price = decrease amount demanded (via movement along the d curve) Quantity supplied amount that sellers are willing and able to sell. Supply schedule relationship between the p of the good and the qs, holding constant everything else that influences how much producers of the good want to sell. Law of supply and demand: the price of any good adjusts to bring the quantity supplied and quantity demanded for that good into balance.