ECON 201 Lecture Notes - Lecture 4: Demand Curve, Inferior Good, Normal Good

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jadeferret209

13 Mar 2016

School

University of Calgary

Department

Economics

Course

ECON 201

Professor

Ronald Schlenker

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Document Summary

Increase in price causes a decrease in quantity demand: decrease in price causes an increase in quantity demand. Increase in income in income increases demand if a normal good: decrease in income increases demand if an inferior good. Increase in price of substitute (pepsi) increases demand for good (coke): decrease in price of complement (beer) increases demand for good (pizza). If i expect the price of the product to increase in the future, my demand today will increase. Decrease in taste decreases the demand curve: decrease in population decreases the demand curve. Increase in income decreases demand if an inferior good: decrease in income decreases income if a normal good, decrease in price of substitute (pepsi) decreases demand for good (coke). Increase in price of complement (beer) decreases demand for good (pizza). If i expect the price of the product to decrease in the future, my demand today will decrease. People start to going to starbucks in droves.

Related Questions

a. An increase in the price of Post Frosted Mini Wheats (a substitute for Kellogg Frosted Mini Wheats) should

shift the Demand curve for Kellogg Frosted Mini Wheats to the right.
shift the Demand curve for Post Frosted Mini Wheats to the left.
cause the Demand curve for Pepsi to shift to the right.
cause no shift in the Demand curve for Kellogg Frosted Mini Wheats.
cause the Demand curve for Kellogg Frosted Mini Wheats to shift to the left.

b. Assuming Demand is downward sloping and Supply is upward sloping (as we usually do), what happens to equilibrium price and quantity of a good when Supply decreases?

P decreases; Q decreases

P increases; Q decreases

P decreases; Q increases

P and Q should not change

P increases; Q increases

c. Suppose frictional unemployment is typically UF = 3.0% and structural unemployment is typically US = 2.0%, then what is the "natural" rate of unemployment, UN?

none of the other options

Changes in demand factors other than the price of the good would result in a change in demand.

a. An increase in demand is depicted as a rightward shift in the demand curve.

b. An increase in demand means that consumers plan to purchase more of the good at each possible price.

c. A decrease in demand is depicted as a leftward shift of the demand curve

d. A decrease in demand means that consumers plan to purchase less of the good at each possible price.