ECO 101 Lecture Notes - Lecture 5: Demand Curve, Inferior Good, Normal Good
Document Summary
Individual v. market demand, demand curve, horizontal summation. Demand curve shows effect of price on quantity demanded. Income: normal good: demand for the good increases when income increases. Inferior good: demand for the good decreases when income increase: ex. If you expect a higher price for some good in the future, you"ll buy more of it while it"s cheaper: number of buyers, more people making purchases means increased demand. As price of a good increases, quantity supplied tends to increase (margin of profit: supply curve is upward sloping, prince on y-axis, quantity on x-axis. To get the market supply, we use horizontal summation (just like in market demand!) When supply curve moves down and to the right, there"s an increase in supply, up and to the left is a decrease in supply. Shifts can be increase or decrease in supply.
