ECON 2305 1st Edition Lecture 4 Outline of Last Lecture I Opportunity Cost II Production Possibilities Curve Outline of Current Lecture I Macro Goals II Supply and Demand III Non price determinants Current Lecture Macro Goals Full employment About 5 currently NAIRU Non accelerating inflation rate of unemployment Price Stability No inflation Inflation vs Deflation overall progress Small amounts of inflation is beneficial Increased standard of living Freedom of choice Safety for sick and elderly International trade balanced Supply Demand Variable Price and quantity one changes the other Parameter Value that unites and ties the change together Ceteris Paribus All is held constant Law of Demand Price and Quantity are inversely related These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Price goes up quantity goes down Only under ceteris paribus it stays constant Law of Supply Price and Quantity are directly related Price goes up quantity goes up Ceteris paribus is when all things are held constant Law of Product Equilibrium Market at rest Quantity supplied equals quantity demanded Demand curve Represents a willingness to buy Does not mention the market place Moving up and down the demand curve shows change in quantity demanded A right or left shift of the demand curve shows change in demand Supply Curve Shows willingness to sell Does not tell us the market place Equilibrium point Anything above the equilibrium SURPLUS Anything below the equilibrium SHORTAGE Non price determinants of demand think parameter Taste Preferences Style Health Age Music Income Income goes up demand goes up Normal Good Income goes up demand goes down Inferior Good Inferior goods are not universal and are based on personal preference Price of related goods Complementary goods one good affects the other Price goes up demand goes down
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