ECON 1B03 Chapter Notes - Chapter 4: Ceteris Paribus, Demand Curve, Inferior Good

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ECON 1B03 Full Course Notes

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Econ 1b03 - chapter 4 supply and demand. As income increases, the demand for a normal good will: Increase and demand curve shifts to the right. As income increases, the demand for an inferior good will: decrease, demand curve shifts left. If 2 goods are substitutes: if the price of good # 1 increase, the qd of good #1 decrease and the demand for good # 2 will increase (e. g coke and pepsi) If the 2 goods are compliments: if the price of good # 1 increases, the qd of good # 1 decreases and the demand for good # 2 will also go down (e. g gas and automobile) Changes in expectations and tastes will shift demand accordingly. Quantity supplied, qs: amount of good that sellers are willing and able to sell. When the price of a good increases, ceteris paribus, selling that good becomes more profitable and firms will want to offer more for sale.

Related Questions

Which of the following is true?

a. The demand curve for a good shift leftward when the price of a substitute rises.
b. If consumers expect the price of a good will rise in the future, the demand curve shifts leftward.
c. An increase in population shifts the demand curve for most goods leftward.
d. For an inferior good, when income increases, the demand curve shifts leftward.

maroonferret252

1. If goods A and B are substituted in consumption, a decrease in the price of good B will _________. If goods A and B are substituted in production, a decrease in the price of good B will _________.

A) increase the demand for good A; increase the supply for good A.

B) decrease the demand for good B; decrease the demand for good A.

C) decrease the demand for good A; increase the supply for good A.

D) increase the demand for good B; decrease the demand for good A.

2. If goods A and Z are complements in consumption, an increase in the price of good Z will _________. If goods A and Z are complements in production, an increase in the price of good Z will _________.

A) increase the demand for good A; decrease the supply for good A.

B) decrease the demand for good A; increase the supply for good A.

C) decrease the demand for good Z; decrease the supply for good A.

D) increase the demand for good A; increase the demand for good A.

3. what are the differences between (substitutes / complements) in (consumption / production)?

azureplatypus252

1) If a good has a price elasticity of demand of -3, it implies that:

if the price of the good increases by 1%, the quantity demanded of the good will decrease by 3%.

if the price of the good increases by 3%, the quantity demanded of the good will increase by 1%.

if the income of the consumer increases by 3%, the quantity demanded of that good will increase by 1%.

if the income of the consumer increases by 1%, the quantity demanded of that good will increase by 3%.

2) Which of the following goods is likely to have the lowest price elasticity of demand?

ECON 1B03 Chapter Notes - Chapter 4: Ceteris Paribus, Demand Curve, Inferior Good

ECON 1B03 Full Course Notes

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