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ECON 219 (3)
Chapter 3

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McGill University
Economics (Arts)
ECON 219
Christopher Ragan

ECON 219 Chapter 3: the demand and supply model is not always the right way to think about price and quantity ex: iPods, Coke*, Diamond Rings**, Doctors/Lawyers/Engeneers * Cocaine = yes, Coca-Cola = no ** maybe? Demand Quantity Demand: Carrots, Wheat, Oil, Gasoline, Copper, Wire, Steel, Aluminium, Beef, Porc, Apples, Microchips, etc, Canada 2011 Carrots : how much do the consumers want to buy in that year? = quantity demand Actual purchase : what ends up actually being purchased flow as opposed to a stock ceteris paribus : all other things being equal price of product and quantity demand are negatively related Why? there are usually several different products that can substitute any given want or desire Influences on demand: income, tastes, age distribution, population, price of alternatives, Substitution (why demand curves slope down)--> multiple products meet the needs of consumers (ex: coke/pepsi) complimentary goods --> things that are generally bought together (golf clubs/golf balls) thus if the price drops for one item, the demand for the other will rise without the price changing. flow : amount in demand during a certain time interval stock: amount in demand during a moment of time. quantity demanded : a reduction in price causes more quantity demanded demand : an increase in income (or any other variables changing) increases or decreases the demand, causing the graph to shift to the right inferior good : goods whose dammed does not increase when the average consumer income does - average household income, prices of other products, distribution of income or population, expectations about the future Quantity Supplied the amount of a product that firms desire
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