ECO 001 Lecture Notes - Lecture 2: Demand Curve, Peanut Butter

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15 Jun 2018
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Lesson 2: Supply and Demand
Jadzia Wray
A.) The law of demand ā€“ know it, graph it, love it | demand curve->
a. Demand ā€“ how much people are willing or able to buy
b. Law of demand - As price drops, people will buy more of it
i. Put things on sale and more people will buy it unnecessarily
ii. Price = y, Quantity= x
c. Demand - decrease
B.) The law of supply ā€“ know it, graph it, kinda like it | supply curve ->
a. Supply ā€“ how much you are willing or able to spend
b. Law of supply ā€“ as price increases, quantity supply increases
i. When prices are high to buy things, then people will sell more of it.
ii. Supply ā€“ up ā€“ increase
iii. Price = y, Quantity = x
C.) Equilibrium ā€“ Market Price and Quantity ā€“ the point where sellers and buyers can
meet in the market to their advantage. Surplus (S)
- Surpluses ā€“ when the supply is greater than
the demand
- Shortages ā€“ when the demand is greater than
the supply shortages (D)
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Document Summary

Equilibrium market price and quantity the point where sellers and buyers can meet in the market to their advantage. Surpluses when the supply is greater than the demand. Shortages when the demand is greater than the supply. D. ) what can make the demand curve shift: what can change to make the curve go to the right or left: the thing became more popular = shifts to the right; the thing becomes less popular. Expectations of the future can make the curve shift: ex: as gas prices go down, people buy gas more, demand curve shifts right, as price goes up, the demand for it goes down. Complimentary goods ex: peanut butter and jelly: quantity demanded v. demand, if the price of peanut butter goes up, the quantity demanded will go down. Then people will buy less jelly although that price didn"t change.

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