ECON 1900 Study Guide - Economic Equilibrium, Inverse Relation, Ceteris Paribus
Document Summary
Demandfigure 3-10123456020406080100quantitypricelaw of demand: all else equal, as price falls, the quantity demanded rises (& vice versa, supported by: An increase in demand is a shift to the right. Changes in money incomes: when income increases. Demand for normal goods increases (the whole curve shifts to the right) When the price of a substitute increases the demand curve shifts to the right. Quantity supplied depends on: price (move up along the supply curve if. Increases supply increases , shifts right: prices of other good being produced (if the price of corn goes up , supply goes up , cotton supply goes down) ***substitutes in production are not the same as. Substitutes in consumption (corn and cotton can be substitutes in production if there"s only one field ) Higher price necessary to induce higher supply, to cover higher costs of production. Market quantity industry (q) = number of frims (n) * individual firm quantity (q)
