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Lecture

ECO 100Y1- LA#2-Class Note- 20110919.docx

8 Pages
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Department
Economics
Course Code
ECO101H1
Professor
W.G.Wolfson

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Description
LA #2 – Supply and Demand Demand - Determinants of quantity demanded; Time, Desire, Determinants o Substitute goods o Complimentary goods o Income o Change in taste and preferences o Price Determinants of Quantity Demanded 1) Price of X **- prime determinant of Q d 2) Income 3) Price of Substitute 4) Price of Compliment Goods 5) Taste/ Preferences 6) Price Expectation 7) Population Qxd  Qx; Px; Py; Pz Price of Good x Price of Substitute Good Y Price of Compliment Good z Price increase, quantity demanded decrease - Buy substitute goods - Income effect  1) Taste/ Preferences  2a) Income - - Normal good- income bigger, buy more o B) - Inferior Goods, income goes up, buy less- better goods to replace it o C) - Income Independent  3) Price Expectation- rarely dealth with it  4) population - Demand Curve for Good X - - Linear Relationship - Negatively Slope - D= Demand Schedule Shifts in Demand - D2= Increase in Demand, Income increase, this good is normal, income decrease, inferior good increase - D3= Decrease in Demand ;Bad Media, A cheaper substitute good Change in Quantity Demanded - Change in Price Cause movement not as same as shift - Quantity Supplied Qs 1) Price of Good x ** mainly used : 2) Price of Input (Raw Materials): 3) Price of Good y: 4) Technology: Relate to number 1=Shifts in Supply - S2= Increase in Supply o Cause is  1) Technology improvement  2) Alternate Good Y - Equilibrium - - D: P=18-1Q - S:P=0.5Q - Higher line- quantity demand less than quantity supplied - AB= Excess Supply in Market Place= 6 Units - FG= Excess Demand =6 Units Question 3 “Laws” of Supply and Demand Increase in Demand Increase in Demand, Incre
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