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ECON 1020 (99)
Lecture 6

ECON 1020 Lecture 6: Lecture 6

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University of Manitoba
ECON 1020
Ryan A.Compton

Oc98 Complements: when price increases of good 1, the demand of good 2 decreases Ex: hot dogs and hot dog buns Substitutes: when the price of good 1 increases, the demand of good 2 increases Ex: Coke and Pepsi Consumers expectations Future prices o Future income Ex: if we expect a huge snow storm tomorrow, the demand for shovels today will increase Ex: if you expect to get a job offer next week, you may spend more money the week before knowing the income will be coming in the future Supply: Supply: amount producers are willing and able to sell at a given price Law of supply: as the price rises the quantity supplied rises (and vise versa) Supply curve slopes upwardpositive slope because of the law of supply Why? Price acts as an incentive to producers As price increases, producers produce more, and vise versa Producers are responding to prices Change in supply = shift of the supply curve (left or right) Change in any factor, not related to price Change in quantity supplied = shift along the supply curve (up or down) Change in price Determinants of Supply: Resource prices o Resource: any input to production
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