COMMERCE 1AA3 Lecture Notes - Lecture 5: Kraft Dinner, Ceteris Paribus, Normal Good
21 Mar 2016
School
Department
Course
Professor
Document Summary
Buyers and sellers have a very small impact on the price. Quantity demanded (qd): the amount of goods and services that consumers are able to buy. Price and quantity demanded (qd) have a negative relationship: price increase, qd decreases/price decreases, qd increases. Law of demand: other things equal (ceteris paribus) when the price of a good rises the quantity demand of that good falls. Change in qd: movement along the determinant of demand other than price: increase in demand demand shift right. Normal good, as your income rises you want more of that good. Inferior good, as your income increases, you buy less of a good (ie. kraft. Dinner, bus rides), income falls, the qd will increase. Increases in price of one good increase in demand for another good: substitues (ex. Increase in price of one good decrease in demand for another good: compliments (cars and gas) If people"s preferences change towards a good, demand will change.
