Our Micro-Economics [ECO20A] 2nd year University Notes offer comprehensive and easy-to-understand summaries of key concepts, with colorful graphs and calculations to help you visualize complex ideas. These notes are perfect for students looking to enhance their understanding of micro-economics and ...
, DEMAND CURVE Linked to CONSUMERS
FLOW concept
NOT wants, needs or requests
Relationship between the quantity of a good that consumers are Movement ALONG the demand curve
willing to buy and the price of the good
quantities of a good that prospective buyers are willing and able to
purchase during a certain period ∆ price of product
[relates to plans of households, firms and other participants in the
economy] = changes the QUANTITY demanded
**always remember to draw
LAW OF DEMAND ↑ price ↓ demand arrows**
Other things being equal (ceteris paribus), the HIGHER THE PRICE OF A
GOOD, the LOWER THE QUANTITY DEMANDED
NEGATIVE RELATIONSHIP (price & demand)
SHIFT of the demand curve
Qd = f (Px; Pg; Y; T; N) ∆ in elements
DETERMINERS Z ∆ in price of RELATED GOODS
Z ∆ in CONSUMER INCOME
Z Price of product (Px) Z ∆ in TASTE
Z Price of related goods (Pg) Z ∆ in HOUSEHOLD SIZE
Z Income of consumers (Y)
= change in DEMAND for product
Z Taste / preference of goods
(T) **always remember to draw
Z Size of household (N) arrows**
Relationship between the quantity of a good that producers are
Movement ALONG the supply curve
willing to sell and the price of the good
quantities of a good or service that producers plan to sell at each
possible price during a certain period ∆ price of product
[planned quantities (that producers or sellers plan to sell at each price]
= changes the QUANTITY supplied
LAW OF SUPPLY ↑ price ↑ supply
**always remember to draw
Other things being equal (ceteris paribus), the HIGHER THE PRICE OF A
arrows**
GOOD, the HIGHER THE QUANTITY SUPPLIED
, COMPLEMENTARY GOODS SUPLEMENTARY GOODS
A COMPLEMENT → GOODS THAT TEND TO BE USED JOINTLY TO A SUBSTITUTE → A GOOD THAT CAN BE USED IN PLACE OF ANOTHER
SATISFY A WANT GOOD TO SATISFY A CERTAIN WANT
RULE OF COMPLEMENTARY GOODS RULE OF SUPLEMENTARY GOODS
↑ PRICE (Good A) ↓ DEMAND (Good B) [decrease in demand] ↑ PRICE (Good A) ↑ DEMAND (Good B) [increase in demand]
↑ PRICE (Good A) = LEFTWARDS SHIFT OF THE DEMAND CURVE ↑ PRICE (Good A) = RIGHTWARD SHIFT OF THE DEMAND CURVE
↓ PRICE (Good A) ↑ DEMAND (Good B) [decrease in demand]
↓ PRICE (Good A) = RIGHTWARDS SHIFT OF THE DEMAND CURVE
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