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NYU - ECON 101 - Class Notes - Week 2

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NYU - ECON 101 - Class Notes - Week 2

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background image September 13th, 2016     DEMAND : when you talk about the demand side, you are referring to the behavior of the  buyers   demand vs. quantity demanded (QD)    --demand=desire? NO    --QD:  amount  of any good/service that  all  buyers decide to choose during a period of  time  given constraints  (income, prices)      -implies choice: there is always opportunity cost       -hypothetical (if, they)      -ex) if coffee is $1, I buy more; if coffee is $5, I buy less      -depends on price (P)      -it is a point ALONG the curve    Ceteris Paribus: QD is a relationship b/w P and amount of good/service demanded @each  price      -inverse relation (if price falls, QD increases); downward sloping curve   **this relationship given all factors constant is called Law of Demand**  DRAW CURVE  Example: maple syrup     --the higher the price per bottle, the less people will want the syrup   $1    75,000  $2    60,000  ...        ...  Note: price (P) is on y axis, quantity on x axis (this applied to both demand AND supply)   Why does the demand curve slope down? Inversely related  
background image Demand vs quantity demanded cont'd    --demand: refers to the whole curve       -when one of the factors held constant changes       -increase in quantity, then curve shifts right     ex) income increase  Factors That Change The Demand Curve:  income and wealth       -wealth: everything I own - everything I over       -measure over a period of time:  flow variable    Income Change/  Wealth      normal (variable)    inferior(variable)  Increase      demand increase    decrease in demand   Decrease      demand decrease    increase in demand   Inferior vs. Normal Good    --inferior goods: a good that people demand less of as income rises      -demand decreases and the curve shifts leftward    --normal goods: a good that people demand more of as income rises    ex) steak vs. potatoes       -curve shifts left for potatoes when income increases; it's cheaper and people  don't find it to be their standard of food anymore       prices of related goods      - substitute good : coffee is good x, tea is good y: if the price of tea(y) doubles,  then someone will drink more coffee in order to compensate...the quantity of coffee changes  but not the price       - complimentary good :coffee and creamer; if the price of coffee shoots up, then I  will buy less creamer  
background image population    --population increase, more buyers    --more buyers, therefore an increase in demand       expected price      ex) I like dark chocolate, but cocoa beans are scarce, so dark chocolate price will  increase: I buy more dark chocolate NOW      -if buyers expect prices to rise, the current demand will shoot up  tastes/preferences     --if buyers start preferring an alternate good, then the demand of a current good will fall  and the demand curve will shift LEFT    ex) lost desire for apples and decided to opt for mangoes instead; demand for  mangoes rises and demand for apples decreased   SUPPLY : not fixed availability; what sellers choose to offer at each price (P) during a  period of time given constraints (input, price, technology         --comes from the sellers: they choose to supply @ any P quantity that maximized profit    -- quantity supplied       -relationship between P and amount of good/service offered at any point P      -positive relationship (if price increases, quantity increases)    **the constitutes to the Law of Supply**  the Law of Supply    --when price of good rises, everything else at a constant, the quantity of good supplied  will rise     --when sellers can get higher prices for goods, producing and selling become more  profitable      ex) rise in the price of laptops but not desktops will encourage comp. makers to  focus more on laptops, not computers     --price and quantity supplied are POSITIVELY RELATED    --this translates to an upward curve on a graph, in contrast to the demand curve       -each point on the curve shows the quantity that sellers would choose to sell at a  specific price  

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School: New York University
Department: Engineering
Course: Introduction to Microeconomics
Professor: Professor Bhiladwalla
Term: Fall 2016
Tags: Microeconomics and Economics
Name: Chapters 3 & 4
Description: These notes cover Supply, Demand, curves, shifts, and real life examples (chapter 3). They also cover government involvement in the economy and how they can affect supply and demand.
Uploaded: 09/16/2016
9 Pages 61 Views 48 Unlocks
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