ARE 2210 Lecture Notes - Lecture 6: Marginal Utility, Demand Curve, Inverse Relation
29 Jan 2020
School
Department
Course
Professor
Document Summary
Scarcity plays an important role in utility and consumer demand. Consumers should buy only those items that increase overall utility. Resource scarcity gives us the best of all worlds. Lowest prices and highest utility for consumers. Lowers production costs and highest long-run profits for producers. Schedule of how much consumers are willing and able to buy at various prices. Inverse relationship between price and quantity demanded. Difference between movement along the demand schedule and a shift in demand. Movement along demand schedule: when the quantity demanded changes in response to a raising or lowering of the price if the good. When the demand shifts to the right (increase in demand) or to the left (decrease in demand) a serious change in the market for the product may have occurred. Note: products own price and seasonality are not demand shifters. Demand elasticity: one of the major concerns of business owners is the effect of price changes on sales.
