BSEN 401 Lecture Notes - Ceteris Paribus, Margarine, Inferior Good

• School: University of Calgary
• Department: Business and Environment
• Course: BSEN 401
• Professor: William Huddleston

Document Summary

Law of demand: (( qx/ px < 0 or dqx/dpx < 0 for qx = quantity of x and px = price of x) The negative slope can be linear, concave, or convex. I will usually draw convex demand functions but use linear demand functions for calculations. Positive sloped demand functions can exist but are rare. Some positively sloped demand functions are called giffen goods. Quantity demanded is the quantity response to one price whereas demand is the set of all the prices and quantities. Perhaps the most common mistake in economics is the statement that the demand for a commodity (e. g. , gas) falls because of a rise in the price of the commodity. A fall in the price of a commodity causes a rise in the quantity demanded of the commodity (movement along the demand curve) but the demand curve itself does not change. A change in one of the ceteris paribus conditions, however, does change demand.