Econ 240 6st Edition Lecture 6 Outline of Last Lecture I. Demand and supply a. Demanda.i. Quantity demanded is the amount (of a good or service) that people are willing and able to buy at specified price during specified time perioda.i.1. Law of Demand a.i.2. Market DemandOutline of Current Lecture II. Demanda. Change in Quantity Demanded b. Change in Demand c. The main factors that change demand curve:d. Prices of Related Goodse. A complement is a good that is consumed with another good f. Incomef.i. A normal good is a good for which:f.ii. An inferior good is a good whichg. Expectationsh. Number of Buyersi. PreferencesIII. Supplya. Law of Supplyb. Individual Supply and Market SupplyThese 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.Current LectureChange in Quantity Demanded - When the price of a good changes, the quantity demanded changes (the law of demand)Change in Demand - When the price of the good does not change but something other than the price change (e.g., Income)- A change in demand means that there is a new demand schedule and a new demand curve The main factors that change demand are:- Prices of related goods- Income - Expectations- Number of buyers- Preferences Prices of Related Goods- A substitute is a good that can be consumed in place of another good  For example: gasoline and ethanol- The demand for a good increases, if the price of one of its substitutes rises- The demand for a good decreases, if the price of one of its substitutes fallsA complement is a good that is consumed with another good- For example: Gasoline and car- The demand for a good increases, if the price of one of its complements falls 2- The demand for a good decreases, if the price of one of its complements rises Income - A normal good is a good for which: The demand increases if income increases The demand decreases if income decreases - An inferior good is a good which: The demand decreases if income increases The demand increases if income decreases Expectations- Expected future income and expected future prices influence demand today Example: if price of a computer is expected to fall next month, the demand for computers today decreases Number of Buyers- The greater the number of buyers in a market, the layer is the demand for any good Preferences- When preferences change, the demand for one item increases and the demand for another item (or items) decreases - Preferences change when: People become better informed (e.g., orange juice)- New goods become available (e.g., iPhone)Supply- Relationships between price and quantity supplied - Quantity supplied is the amount (of a good or service) that people are willing and able tosell at a specified price during a specified time period. Law of Supply- If the price of a good rises, the quantity supplied of that good increases- If the price of a good falls, the quantity supplied of that good decreasesIndividual Supply and Market Supply - Market supply is the sum of supplies of all sellers in a