ECON 1100 1st Edition Lecture 3Outline of Previous Lecture- Absolute Advantage Review - Comparative Advantage Outline of Current Lecture- Intro to markets - Demand - Reasons for change in demandCurrent Lecture- Markets (will be continued in later lectures) • What (Product market) - Product or service market - Different products in different markets • Where (Geographic market) - Where are customers or where are you selling? - Can use things such as shipping information, etc. - Demand • “Consumer behavior” • Law of Demand - Negative relationship between priced and demand - Market price increases; quantity demand decreases • ^P->vQD - Market price decreases; quantity demand increases • vP->^QD - Why does the demand curve slope downwards? • Income Effect- Occurs when income is held constant • Substitution Effect - i.e. if identical, consumer would chose the cheapest • High price, low demand and low price, high demand - Diminishing Marginal Utility • “Decreasing change in economic satisfaction” - Change In Quantity Demanded • A movement along existing demand curve • Only reason that a change in quantity demanded takes place is due to a change in the priceof that good or service - Reasons For A Change In Demand • Number of customers• Consumer