ECON 160 Lecture Notes - Lecture 9: Economic Equilibrium, Opportunity Cost, Demand Curve
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17 Sep 2016
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Demand schedule: numbers of goods sold at each price. A what-if idea, if the price were this, someone"s personal demand would be . Not a perfect model, because concerts are heterogeneous. Assume for this model that concerts are homogeneous. Key reasons for determined demand: preferences and tastes, income, number of buyers, prices of related good. Complement: something that goes with the good (soda and a concert: cheap complement demand goes up, expensive complement demand goes down. Substitute: an alternative to the good (a movie instead of a concert: cheap substitute demand goes down, expensive substitute demand goes up. Ceteris paribus, people will buy more stuff with a higher income, because people are greedy. Law of demand: as the price of a good falls, quantity demanded rises. When graphing the function, the price should go on the y-axis, and the number of the good should go on the x-axis. When the price drops, people begin to enter the market.