ECON 3510 Chapter Notes - Chapter 3: Indifference Curve, Demand Curve, Deadweight Loss
30 Jun 2019
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Topic 3/ Chapter 3
Quantity Demanded is the amount of a product people are willing to buy at a certain
price; the relationship between price and quantity demanded is known as the
demand relationship.
Demand is how much (quantity) of a product or service is desired by buyers.
Movements along versus shifts in demand curve demand curve:
ā¢If price of a good changes then we move along a demand curve
ā¢If price increases then we move up to the left, price decrease then we move down
to the right
ā¢When anything other than the price of the good changes then we may get a shifting
of the demand curve
ā¢e.g. Increases in income would shift the demand curve to the right since more
quantity would be demand at all prices (decreasing income would shift it left)
ā¢e.g. When the prices of complement goods increase, you will consume less of
the good whose price has not changed and the demand curve will shift to the
left
An indifference curve represents all the combinations of the two goods amongst
which an individual is indifferent.
ā¢In other words, all the points on an indifference curve represents combinations
of goods which give an equal amount of total utility or happiness
Quantity supplied is the amount of the good businesses provide at a speciļ¬c price.
