Log in
HomeTextbook Notes300,000CA170,000

ECON 1000 Chapter Notes - Chapter 3: Economic Equilibrium, Demand Curve, Marginal Utility

23 views5 pages
alanw
10 Jan 2020
School
York University
Department
Economics
Course
ECON 1000
Professor
Karen Bernhardt-Walther

For unlimited access to Textbook Notes, a Class+ subscription is required.

castroariane563 and 39059 others unlocked
ECON 1000 Full Course Notes
10
ECON 1000 Full Course Notes
Verified Note
10 documents

Document Summary

Chapter 3 supply, demand, and market equilibrium: demand, definition, the entire relationship between the price of a good or service and the quantity demanded of that good or service. As the price of one good rises, it becomes more economically beneficial to switch to a substitute. Income effect: when price rises and other things remain the same, the price rises relative to income. They are: prices of related goods, a substitute is a good that can be used in place of another good. If the price of a good rises, more people will switch to a substitute. If the price of the substitute rises, more people will switch to the good: a complement is a good that is used in conjunction with another good. If the price of a complement falls, more people are likely to buy the complement and the good: expected future prices. Income: when income increases, people have more money to spend on goods and services.

Get access

Grade+
$40 USD/m
Billed monthly
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers
Class+
$30 USD/m
Billed monthly
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
7 Verified Answers

Related Documents

ECON 1000
Final Exam
Study Guide
ECON 1000 Study Guide - Demand Curve, Relative Price, Marginal Utility
amberelk420
ECON 1000 Chapter Notes - Chapter 3: Economic Equilibrium, Inferior Good, Cowhide
blackclam764
ECON 1000 Lecture Notes - Demand Curve, Substitute Good, Japanese Yen
salmoncricket870

Related Questions

When the price of good A rises from $180 to $220, the quantity of good A demanded decreases from 250 to 150 units a day, and the quantity of good C demanded increases from 75 to 125 units a day.

From this information, we can determine that _______.

A. the cross elasticity of demand is positive, so the two goods are substitutes

B. the goods are complements because as the price of good A changes so does the quantity demanded of good C

C. good C is a normal good because as the price of good A rises, people switch to good C

D. the cross elasticity of demand is less than 1, so the two goods are substitutes

Discussion #1

The law of demand states that a fall in the price of a good raises the quantity demanded, and the increase in price leads to a decrease in quantity demanded. The price elasticity of demand measures the responsiveness of the quantity demanded to a change in price. Demand for a good is said to be elastic if the quantity demanded responds substantially to changes in the price, and the percentage change in quantity demanded is greater than the percentage change in price. Demand is said to be inelastic if the quantity demanded responds only slightly to changes in the price, which indicates that the percentage in price is greater than the percentage in quantity demanded.

However, the extent of responsiveness of quantity demanded to a change in price depends on the nature of a particular good or service in the market. The price elasticity of demand partly depends on the availability of close substitutes. When a large number of substitutes are available, consumers respond to a higher price of a good by buying more of the substitute goods and less of the relatively more expensive good. In addition, goods or services that are considered necessities tend to have less elastic (more inelastic) demand, whereas goods or services that are considered luxuries have more elastic (less inelastic) demands.

  • Explain why the demand for the good or service provided by the organization you work for is elastic or inelastic. How does this influence pricing decisions?
  • Provide examples on how the availability of close substitutes affects price elasticity of demand.
  • Give specific examples of necessities or luxuries, and explain how they affect price elasticity of goods or services.

Please answer ALL bulletins and place the answers under the correct bulletin.

20) The law of demand states that, other things remaining the same, A) price and quantity supplied are positively related. B) the higher the price of a good, the smaller is the quantity demanded. C) as income increases, willingness to pay for the last unit increases. D) the higher the price of a good, the greater is the quantity demanded. E) the higher the price of a good, the smaller is the quantity supplied.