ECON 1BB3 Study Guide - Final Guide: Price Ceiling, Ceteris Paribus, Price Floor

• School: McMaster University
• Department: Economics
• Course: ECON 1BB3
• Professor: Bridget O' Shaughnessy

Document Summary

Demand: the relationship between the various possible prices of a product and the quantities of that product consumers are willing to purchase. Quantity demanded: the amount of a product consumers are willing to purchase at each price. Law of demand: other things remaining the same, the higher the price of a good, the smaller is the quantity demanded. Demand curve: represents the inverse relationship between quantity demanded and price, ceteris paribus. Change in quantity demanded: the effect of a price change on quantity demanded, movement along the demand curve. Demand determinants: factors that can cause an increase or a decrease in product"s demand, shift of the demand curve, occurs from: Substitute goods: products that can be consumed in place of another. Normal goods: products whose demand changes directly with income. Example: rise in income, demand curve for normal goods shift . Inferior goods: products whose demand changes inversely with income.