OCTOBER 2ND!- first examDemand -the ability and willingness to buy specific quantities of a good/service at alternative prices in a given time period, ceteris paribus (all things remain the same)Law of Demand -the negative relationship between price and quantity demanded: ceteris paribus, as price rises, quantity demanded decreasesDemand Curve- GraphPrice on vertical, quantity on horizontalDemand Determinants• Income & Wealth• Prices of Other Goods & Services• Substitutes- McDonald's fries vs Wendy's fries (replacements)• Complements- French fries and ketchup- If one goes down the other goes up• Tastes & Preferences• ExpectationsMovement vs ShiftMovement along a CurvePrice changes-> change in quantity demanded->Ceteris Paribus holds->Endogenous ChangeEndogenous-internalShift in a CurveDeterminant changes->change in demand->Ceteris Paribus broken->Exogenous ChangeExogenous-externalSupplyQuantity SuppliedThe amount of a particular product that a firm would be willing and able to offer for sale at a particular price during a given time period.Law of SupplyThe positive relationship between price and quantity of a good supplies: an increase in market price will lead to increase in quantity suppliedSupply CurveDeterminants of Supply• Cost of Production• Prices of required inputs• Technologies used• Prices of Related ProductsMovement VS ShiftPutting pieces
View Full Document
Unlocking...