ECON 2010 Lecture Notes - Lecture 7: Peanut Butter And Jelly Sandwich, Giffen Good, Demand Curve
1 Feb 2017
School
Department
Course
Professor
46
ECON 2010 Full Course Notes
Verified Note
46 documents
Document Summary
Relatively steep demand curve = not very reactive to price: does(cid:374)"t affe(cid:272)t (cid:395)ua(cid:374)tit(cid:455) de(cid:373)a(cid:374)d (cid:373)u(cid:272)h, usually things you need. Relatively flat demand curve = small price change will greatly affect quantity demanded: thi(cid:374)gs (cid:455)ou do(cid:374)"t (cid:374)eed. Demand curve might be bowed outward if there is a drop-off in willingness to pay at a certain point: bowed inwards is more realistic than bowed outward, food would likely have a bowed demand curve. Not nike shoes, rolex watch, dell laptop. Complementary goods: two goods are complements if consumers choose them together, ex. peanut butter & jelly, cereal & milk, perfect complements: right shoes and left shoes. Substitute goods: two goods are substitutes if consumers often choose one instead of another, ex. Coke and pepsi, sleeping and parties: perfect substitutes: two concerts at the same time in different places. Normal goods: when income increases, consumers buy more normal goods, most goods are normal goods, ex. restaurant food, nice clothes, travel.
