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Chapter 4

ECON 1BB3 Chapter Notes - Chapter 4: Ceteris Paribus, Demand Curve, Market Price


Department
Economics
Course Code
ECON 1BB3
Professor
Bridget O' Shaughnessy
Chapter
4

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Richard Damra Thursday, January 17th, 2013
Econ 1BB3 Demand
Demand
Law of Demand: other things equal (ceteris paribus), the quantity demanded of a good falls as
Market price of the good rises
P
Q
.05
1000
.10
800
.15
600
.20
400
.25
200
Market Demand: the sum of individual demands
Demand and Quantity demand is different
Shifts in demand (change in demand are caused by a change in anything other than price
Movement along the demand curve (change in quantity demanded) is caused by a change in
price.
o If demand increases, the cure shifts OUT
o If demand decreases, the curve shifts IN
o A B: increase in quantity demanded
o B A: decrease in quantity demanded
What will happen everyday low prices if their workers unionize
Price go up cause they want higher wages
Supply
Quantity Supplied (Q^s): the amount of a good that sellers are willing and able to sell.
The variables that influence how much sellers want to sell are:
o 1. Price firm positive relationship between price and quantity (price and supply)
o 2. Input prices
o 3. Technology almost always drive down cost, causing firms producing more
o 4. Expectations of what's going to happen to the price of the good
o 5. Not in list…natural disasters
Law of supply: other things equal (ceteris paribus), the quantity supplied of a good rises as the
price of the good rises
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