ECON 106 1st Edition Lecture 8Outline of Last Lecture I. CapitalismII. DemandIII. Individual DemandIV. Market DemandV. Aggregate DemandVI. Firm DemandOutline of Current Lecture I. Prices of Related GoodsA. SubstitutesB. Complements II. Changes In DemandA. Change in quantity demandedB. Change in demand II. Expectations (demand shifter) III. Supply Shifters IV. Surplus V. Shortage Current LecturePrices of Related Goods (demand shifter)A. Substitutes (+) – Ex. Butter vs. Margarine - What happens to the demand for margarine if there is a change in price of butter? The price of butter increased, so the Qd of butter goes down, so the demand for margarine goes upB. Complements (-) – Ex. Coffee and Creamer- If the price of coffee increases, the quantity demanded decreases, so the demand for coffee creamer decreases Changes In DemandA. Change in Quantity Demanded - A movement along a given demand curve cause only by a change in the price of the goodB. Change in Demand- A shift to a different demand curve cause by a change in something other than the price of the good 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.Expectations (demand shifter)- Income (+)- Price (+)- Supply/Quantity (-)Supply Shifters- Factor (input) prices (-); factor prices go up, supply goes down- Technology (+); pushes the economy forward- Number of firms (+); new firms, more production- Prices of production alternatives (-); if the price of one alternative increases, then it’s alternative decreases - Government taxes/subsidies (-,+); if taxes go up, supply goes down - Expectations (?)Surplus- A surplus occurs when at some price, quantity supplied is greater than quantity demanded- You can find the size of the surplus = Qs – QdShortage - A shortage occurs when at some price, quantity demanded is greater than quantity supplied- You can find the size of the shortage = Qd –