ECON 1123 1st Edition Lecture 3 Outline of Last Lecture I Marginal Benefit II Scarcity III Law of Demand IV Determinants of Demand A Expectations of Prices B Preferences Tastes C Income D Price of Compliments and substitutes E Expectant income Outline Current Lecture V The Circular Flow of Income A Resource Markets B Output Markets VI Price Determination in Competitive Markets A Demand B Supply VII Demand Determinants of Demand Review but with some new things added VIII Demand Curves IX Determinants of Supply A Price of the output or resource B Prices of the resources used to produce the output C Technology D Number of Sellers E Sellers expectation about future prices Current Lecture X The Circular Flow of Income C Resource Markets 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 D Output Markets XI Price Determination in Competitive Markets C Demand Defined Determinants Graphically D Supply Defined Determinants Graphically XII Demand Determinants of Demand Review but with some new things added Demand The quantities of an output or resource that people are willing and able to buy during some period of time Flow variable variable measured over time period Determinants of Demand Note These are not ALL of the things that could influence demand but they are the most IMPORTANT Price of the output resource how much it the resource costs is going to help you decide how much to buy Buyer s Incomes Tastes Psychological and or cultural and biological and or other reasons for buying This could be determined by season holidays anything that makes a certain product sell more or less Buyer s expectations about future prices and or future incomes If you think prices will be going up in the future you will be more likely to buy and vice versa Number of Buyers Prices of Related outputs or related resources Compliments outputs or resources that are generally used together substitutes outputs or resources that fill the same need XIII Demand Curves We make a demand curve under ceteris paribus which means we keep all other determinants of demand constant and change the one we want to see the effect of Note If you change the demand the whole graph shifts but if you change the quantity demanded that is not a shift of the graph rather just a shift up or down on the existing demand curve Also the line that the demand curve follows is called a demand schedule XIV Law of Demand As the price of the output or resources increases the quantity decreases and vice versa XV Determinants of Supply Supply The quantities of an output or resource people are willing and able to sell during some time period supply is also a flow a movement over time F Price of the output or resource G Prices of the resources used to produce the output cost of production H Technology knowledge about producing like if they develop a new way to produce the same good for a lower cost I Number of Sellers J Sellers expectation about future prices Can influence their current selling behavior