ECON 101 Lecture Notes - Lecture 4: Inferior Good, Normal Good, Microsoft Word

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skygoose144

21 Sep 2016

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4 steps to estimate demand curve: survey customers, 2. Add up total quantity demand: scale survey to represent total market, plot the points. Law of demand: demand curve is always downward sloping. Intensive margin: the cheaper something is the more it is bought. Extensive margin: the cheaper something is, the more new customers you get. Increase in demand shifts the curve to the right. Decrease in demand shifts the curve to the left: income, normal good a. i. Walmart products: tastes, new tastes will shift curve for a product, health concerns over iuds in the 90"s decreased emand, price of other goods, substitute a. i. One goes up, the other goes down a. i. 1. a. One goes up, the other goes up b. i. 1. a. If you want workers to work harder c. i. Nap areas: expectations, if you think the price will rise, buy now, if you think the price will fall, buy later, other people"s buying decisions, network effect a. i.

Related Questions

Demand curve:

The demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at any given price. It is a graphic representation of a market demand schedule. The demand curve for all consumers together follows from the demand curve of every individual consumer: the individual demands at each price are added together, assuming independent decision-making. Demand curves are used to estimate behaviors in a competitive market and are often combined with supply curves to estimates the equilibrium price. Demand curves are usually considered as theoretical structures that are expected to exist in the real world, but real-world measurements of actual demand curves are difficult and rare.

The demand curve will move downward from the left to the right, which expresses the law of demand.

If the price of corn rises, consumers will have an incentive to buy less corn and substitute other foods, so the total quantity of corn consumers’ demand will fall. The degree to which rising price translates into falling demand is called demand elasticity or price elasticity of demand. If a factor besides price or quantity changes, a new demand curve needs to be drawn. For example, say that the population of an area explodes, increasing the number of mouths to feed. In this scenario, more corn will be demanded even if the price remains the same, meaning that the curve itself shifts to the right.

According to my view, the demand curve for the Apple Video iPod will increase. According to the given paragraph iPod is thinner and lighter. The hardware and software ecosystem offers good content options and also portable. These are the main qualities expected by the customers. Henceforth customer wants to buy this product in the future also. If the price of the product increases in the future the demand for the product also increases because customers demand more products thinking of price increase in the future. At the same time if the price decreases in this case also customers will buy the product because they think that the good product is coming at a reasonable price. The demand curve for Apple Video iPod in the future may be like follows.

What is your opinion on a competitor product which has similar features to that of an i-pad or say it is better than i-pad and is offered at a comparatively cheaper price, how this will affect the i-pad demand curve and why?