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Lecture

change in demand.docx

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Department
Economics
Course
ECON 101
Professor
Wokia Kumase
Semester
Fall

Description
Sept.18 Demand and Supply *What is the market? Markets and prices. A market is any arrangement that enables buyers and sellers to get information and do business with each other. We have different kinds of markets. Monopoly market: many buyers and many sellers. So what a costumer decides won’t influence price of the market. *Demand On the demand curve, the price does not really mean the real price. It’s a combination of real price and quantity demanded. Relative price: the ratio of its money price to the money price of the next best alternative good...-- opportunity cost Coffee 4 dollars->8 dollars Tea 2 dollars-> What’s the relationship between the price and the quantity demanded.--demand (be illustrated with a demand curve) The curve shows the demand. But the particular points on the curve shows the quantity demanded at different prices. When the price changes, the quantity demanded changes,too. Change in demand: the demand curve will shift to the left or the right. If the demand curve shifts to the left, then the demand deceases. If the demand curve shifts to the right, then the demand increases. Increases/decreases in quantity demanded will be points’ changes on the demand curve.(it can be a liner or a curve) *How does a change in price influence demand? 2 forces that influence the increase or decrease of demand: Substitution effect & Income effect. 1.substitution effect: When the relative price(opportunity cost) of a good or service increases, people
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