MGEA02H3 Lecture 3: Lecture notes week 3

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEA02H3
• Professor: Gordon Cleveland

Document Summary

Behaviour of buyers and behaviour of sellers are both affected by the price of the good. Movements in price will bring these planned behaviours together in equilibrium. Graphically, changes in price cause movements along demand and supply curves. Changes in any underlying factor cause shifts in these demand or supply curve. For demand curves, these underlying factors include price of a substitute, price of a complement, consumer incomes, population and tastes. For supply curves, the underlying factors are the price of labour, the price of capital, the price of other inputs, and technology. The following points are some of the answers that economists give to the question of why people consume. N demand curves reflect the utility (or well-being, or satisfaction, or happiness) of consumers measured in dollars. N demand curves can be used to measure the willingness-to-pay for a good by consumers.