ECONS 101 – 1st Edition Lecture 7 Outline of Last Lecture I. Supply, Demand & Equilibriuma. Assumptionsb. Laws of Supply and DemandOutline of Current Lecture I. Change in Quantity Demanded or SuppliedII. Surpluses and ShortagesCurrent LectureRecap:- Demand measures the maximum you are willing to pay for a good service.- Market Demand is the sum of individual demands for a given price.Change in Quantity Demanded or Supplied: Movement on the Curve- Any changes in price and quantity will lead to a movement along the curves.- Price and Quantity are the two variables (endogenous). By the Law of Demand or Supply, a change in price leads to an increase (or decrease) in Quantity Demanded and an increase (or decrease) in Supply Demanded.o If Supply shifts and Demand remains constant, then there is a movement along the Demand curve, a changed in Quantity Demanded.o If Demand shifts and Supply remains constant, then there is a movement along the Supply curve, a change in Quantity Supplied.- What shifts Demand or Supply?o Outside forces  Exogenous VariablesDemand:- Income:o Normal vs. Inferior- Price of related goodso Complements vs. Substitutes- Tastes / Preferences- Population and Demographics- Expected Future Priceso Inflation 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.o DeflationSupply: - Price of Inputs- Technological Change or Productivityo Positive vs. Negative- Price of Substitutes in Production- Competition- Expected Future Priceso Inflationo DeflationSurpluses and Shortages:- A market that is not in equilibrium moves towards equilibrium. - When it is not, there is a surplus or shortage:o Surplus: Quantity supplied is greater than quantity demanded; market price is above equilibrium price.o Shortage: Quantity demanded is greater than quantity supplied; market price is below equilibrium