ECON 1011 Lecture Notes - Lecture 5: Inferior Good, Opportunity Cost, Normal Good
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Document Summary
Five things that change demand curves: changes in preferences. Product = popular, unpopular > people willing/not willing to buy. Totally exogenous: changes in prices of related goods. Goods that can easily replace each other. Goods that go well with one another: changes in income. Some normal goods don"t follow this ^^ rule (even if income increased, wouldn"t rush out to buy another dishwasher or something) Don"t have to buy crappy stuff anymore > upgrade to better products: changes in number of consumers. Population/demographics changes demand: changes in expectation. First thought it wasn"t going to rain, didn"t bring ponchos > starts thundering > people buy ponchos, expecting rain. Changes in what agent thinks will happen. Ceteris paribus: everything else held constant/given nothing else changes. Supply curve: shows relationship btwn price and quantity produced or supplied in the market. Law of supply : price increases > quantity increases. Shift in supply vs. change in quantity supplied.
