Econ 111 Macroeconomics DEMAND SHIFTERS
Econ 111 Macroeconomics DEMAND SHIFTERS Economics 111
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This 2 page Class Notes was uploaded by amber weiss on Thursday January 28, 2016. The Class Notes belongs to Economics 111 at Southern Illinois University Edwardsville taught by Mary Anne Pettit in Spring 2016. Since its upload, it has received 15 views. For similar materials see Macroeconomics in Economcs at Southern Illinois University Edwardsville.
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Date Created: 01/28/16
Economics 111 February 3 Notes Non-Price Determinants of Demand—Demand Shifters 1. Consumer tastes and preferences: - Where do we get them from?? - We get them from: culture, age, exposure, gender, education, etc… - Is there something you disliked as a child, but like now? 2. Income: a) Superior Goods- goods you will buy more/less of as income rises/falls - It is considered a luxury good; desserts, entertainment, name brands, etc… - As income increases, the amount of purchased good increases - As income decreases, the amount of purchased good decreases - These will be a direct relationship with each other, meaning that you will buy more when income increases OR less of as income decreases b) Inferior Goods- (NOT poorly made) - Relationship of a good with change in income - Good buy LESS as income RISES - Good buy MORE as income DECREASES - Examples) ramen noodles, generic items, spam, etc… - These will be an indirect relationship with each other, meaning that they go opposite directions. If your income increases you will buy LESS of the off brand things. If your income decreases you will buy MORE. - IF IT IS AN INFERIOR GOOD AND YOUR INCOME INCREASES THE DEMAND SHIFT WILL GO TO THE LEFT. - IF IT IS AN SUPERIOR GOOD AND YOUR INCOME INCREASES THE DEMAND SHIFT WILL GO TO THE RIGHT. 3. Prices of Related Goods: - Not all have relationship with other good a) Complementary goods: - 2 goods are compliments if an increase in price of 1 good causes a decrease in the demand for the other good - GOODS WE BUY AND USE TOGETHER - Examples) peanut butter and jelly; shampoo and conditioner b) Substitute goods: - 2 goods are substitutes if an increase in the price of 1 good causes an increase in the demand for the other - EASY DEFINITION: 2 goods are substitutes if you want 1 or the other, NOT BOTH - Examples) off brand vs. name brand; Coke vs. Pepsi 4. The Number of Buyers in the Market: - MORE buyers will INCREASE demand - LESS buyers will DECREASE demand - What may cause the number of buyers to change? Population Change, Age Shifts, Economic Development, or Demographic Shifts, etc…. 5. Expectations: - Important because people think is going to happen - They make plans based on this - Example) weather, bad snow storm is expected, people rush out and buy/stock up on things
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