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AGEC 200 (18)


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McGill University
Agricultural Economics
AGEC 200
Anwar Naseem

Demand Curve Shifters - Inferior good is opposite to Normal good. Always has a substitute that is a normal good - Substitutes if increase in price of one causes an increase in demand for other o Hybrid Car and Normal car  hybrid costs more and people go for normal cars - Complements: one required/complements another (ie DVDs and DVD Player - Tastes: maybe want healthier foods  shifts demand = increases price - Expectations: if expect income to rise, then will eat out more. If expecting economy to be bad, will affect their decisions - Number of Buyers - Income - **These only shift the D curve - Price: causes movement along D Curve o Is the only factor that causes movement along curve o Ie price becomes lower, there will be more quantity demanded per period - Shift left = demand decreases - EXAMPLE: Price of Music Download Falls o No shift, movement down the D Curve - EXAMPLE: what happens to music downloads if Price of iPods fall o Shifts right - EXAMPLE: what happens to music downloads if Price of CD falls o Shifts left o CDs would be a normal good Supply - Amount of good that seller is willing to sell - Law of Supply: quantity supplied rises when price of good rises o Upward sloping for curve - When price of latte is 0, assume that the sellers don’t want to sell any s - Add up if more than one supplier = Market Q - Supple Curve: How price affects quantity supplied Supply Curve Shifters - Input Prices: milk price falls = shift right
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