PADP 6950 Lecture Notes - Lecture 3: Demand Curve, Inferior Good, Normal Good

• School: University of Georgia
• Department: Public Administration and Policy
• Course: PADP 6950
• Professor: Emily Lawler

Document Summary

Arise from the utility-maximizing consumption choice made by consumers at different prices how does quantity respond to a series of changes in px: moves along the curve vs. If price of good changes, move along the demand curve a change in the quantity demanded. If there is change in some other factor that affects demand, the demand curve shifts there is a change in demand: factors affecting demand > shifters (a) other prices. Substitutes: if demand of a increases when price of b increases (ex. coffee & tea) Complements: if demand of a increases when price of b falls (ex. coffee & sugar) Cross-price elasticity of demand > nxy = % qx / % py. If nxy > 0, goods x & y are substitutes. If nxy < 0, goods x & y are complements. If nxy = 0, goods x & y are nonrelated (b) income. Normal good > demand increases when income increases.