EC260 Lecture Notes - Lecture 1: Shortage, Excise, Demand Curve
Document Summary
Prices of related goods: prices of substitutes, prices of complements. The total demand shows the total quantity demanded at each price. The total quantity demanded at a given price is the sum of the. Inverse demand function quantity of each consumer demands at that price. Inverse demand function: (cid:884)p(cid:2934)=(cid:883)(cid:882) q(cid:2934)d p(cid:2934)=5 (cid:882). 5q(cid:2934)d. Price as a function of quantity demanded. The value consumers get from a good but do not have to pay for. Consumer surplus will prove particularly useful in marketing and other disciplines emphasizing strategies like value pricing and price discrimination. Supply curve shows the amount of a good that will be produced at alternative prices. Law of supply: supply curve is upward sloping. Taxes: excise tax (sales tax), ad valorem tax (property tax) W = price of inputs (e. g. wages) Q(cid:2934)s = quantity supplied of good x. Price as a function of quantity supplied.
