ECON 1000 Chapter Notes - Chapter 2: Veblen Good, Disposable And Discretionary Income, Margarine
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ECON 1000 Full Course Notes
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Law of demand: the quantity demanded of a product will decrease when prices increases (and vice versa) Independent var: price (y-axis), dependent var: quantity demanded (x-axis: reasons for negative sloped curve, substitution effect, income effect, law of diminishing marginal utility. Is a staple good (inferior goods) that have no close substitutes: population. If the consumer expects a products price to rise in the future they are more likely to purchase more of the product now. Inferior good: a product whose demand changes inversely with income (income increases, demand decreases) Supply: the relationship between a product"s price and quantity supplied. Factors affecting supply: number of producers, more producers causes an increase in supply, production costs, higher costs causes a decrease in supply, state of technology. Improvements cause an increase in supply: prices of related products, an increase in price to a related product, causes a decrease in supply of the product being sold.