Economics 1021A/B Lecture Notes - Lecture 3: Demand Curve, Inferior Good, Normal Good

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: Jeannie Ann Shearer

Document Summary

If the price of a substitute rises, people buy less of the substitute and more of the other good: a complement is a good that is used in conjunction with another good. If the price of a donut, a complement of coffee, rises, people buy less coffee: expected future prices. Income: a normal good is one for which demand increases as income increases, an inferior good is one for which demand decreases as income increases, expected future income and credit 5. At equilibrium, the quantity demanded = quantity supply: a movement along the curve is only because the price changes. If the price changes, move along the curve (y axis), if something other than the price changes the curve will shift (change in demand) Market equilibrium: at the equilibrium price, the quantity demanded (quantity you are willing to buy at a given price) equals the quantity supplied, when the price falls, the quantity demanded increases.