ECON 101 Lecture Notes - Lecture 3: Demand Curve, Economic Surplus, Inferior Good

• School: U of M
• Department: Economics
• Course: ECON 101
• Professor: Ronald C Caldwell

Document Summary

Market demand curve: market demand is the horizontal sum of the individual demand curves at each price. 0: horizontally sum up the individuals to get the market quantity demanded. Market demand: interpretations of market demand curve similar to individual demand curves. Height of the demand curve at a given quantity represents the marginal value (mv) of the good at that quantity. Area under the demand cure up to quantity consumed equals the total value (tv) for all consumers in the market. Area between the demand curve and price is the consumer surplus (cs) gained for all consumers in the market: law of demand: as price falls, quantity demanded increases. Quantity demanded vs. demand: quantity demanded. The actual amount of a good consumers are willing to buy at some specific price. Change in quantity demanded is a movement along a demand curve in response to a change in price (holding all else constant) Generally, a change in the price: demand.