ECO101H1 Lecture Notes - Lecture 3: Economic Equilibrium, Demand Curve, Toothpaste

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14 Mar 2016

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ECO101H1 Full Course Notes

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Document Summary

Competitive market: many buyers and sellers, each of whom has no influence on market price (example: coffee) Law of downward-sloping demand: other things equal, the higher is the price of a good, the lower is the quantity demanded. Market demand curve: sum of individual demand curves (at each possible price, sum of the quantities demanded by each individual. A change in quantity demanded (as the price of the good changes) is a movement along the demand curve. A change in demand (for a given price) is a shift in the demand curve. Price of related goods: substitutes, complements. Substitutes: instead of example: tea and coffee. If price of a substitute increases, demand for the good increases. If price of a complement increases, demand for the good decreases. Law of upward-sloping supply: other things equal, the higher is the price of a good, the higher is the quantity supplied.

Related Questions

The market demand curve

a. slopes upward.

b. is found by vertically adding the individual demand curves.

c. represents the sum of the quantities demanded by all the buyers at each price of the good.

d. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good.

When we move along a given demand curve,

all nonprice determinants of demand are held constant.

only price is held constant.

all determinants of quantity demanded are held constant.

d. income and price are held constant.

When the price of a good or service changes,

	a.	there is a movement along a given demand curve.
	b.	the demand curve shifts in the opposite direction.
	c.	the supply curve shifts in the opposite direction.
	d.	the demand curve shifts in the same direction.