ECON 1P91 Lecture Notes - Lecture 5: Normal Good, Demand Curve, Toothpaste

• School: Brock University
• Department: Economics
• Course: ECON 1P91
• Professor: Professor Cottrel

Document Summary

*responsiveness of demand for one good to a change in price of another good. *price of good demanded is always held constant. *magnitude of cross-price elasticity of demand determines size of demand curve shift. *cross-price elasticity large: +positive, xy > 0, x,y>0. * cross-price elasticity large: - negative, xy<0, x,y<0. *given that beer and wine are substitutes, when the price of beer increases, the demand for wine increases. *price and quantity change in the same direction-substitutes. *as income increases, quantity demanded increase by a greater % than income increases. *as income increases, quantity demanded increase by a smaller % than income increases. *negative as income increases above the maximum consumption level of a good. *as income increase, the demand for flowers, a normal good, also increases, *as income increases, quantity of flowers demanded increase, by a lesser % than income increase. *use unique or rare resources in production, s=0.