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This 0 page Class Notes was uploaded by John Om on Saturday January 30, 2016. The Class Notes belongs to ECON 102 at Pennsylvania State University taught by Wayne Geerling in Winter 2016. Since its upload, it has received 18 views. For similar materials see Introductory Microeconomic Analysis and Policy in Economcs at Pennsylvania State University.
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Date Created: 01/30/16
Topic 3 Demand and Supply Markets Markets exist whenever goods amp services are exchanged What s Your Price Law of Demand Law of Demand holding all else constant when the price of a product falls the quantity demanded of the product will rise amp Vice versa Change in quantity Demanded Supply goes up and demand goes up Vice versa BJC Concert Demand Graphically 26 Price 1000 ll 7 i Price is so high that most people are no longer t t f Interested l Typical range of prices over which 1 Ef gy price matters a great deal Notice 7 j the negative side i Price is so low a that it doesn39t t 7 39 39 lop anyone g A if 7 7 31 from going WHO 1 D really wants to 25 in Quantity of Tickets Graph is shown to see how much you would pay for to see the artist of your dreams Quantity 77 Price Demanded 32000 100 price Stood 400 L h i S no i 2 and 5200 8000 5150 27000 5S 100 29800 50 30000 Shifts in Demand Movement along a demand curve 0 Caused by a change in the prii of the good 0 Inverse relationship between price and quantity demand Shift in demand 0 Caused by changes in nonprice factors 0 Entire demand curve will shift to the left or right Price Shift v Movement 2 Shift u Movement 27 a 1 Quantity Quantity quot 39 39 39 What causes a shift in demand Income Price of a related good Tastes and preferences Future expectations Number of buyers Normal good 0 Good in which we buy more of when we get more income Inferior good 0 Good in which we buy less of when we get more income Price of Related Goods Complements 0 Goods and serVices used together Substitutes 0 Good and serVices that can be used in place of each other Change in Tastes amp Preferences A good may become more or less fashionable Demand increases shifts right OR Demand decreases shifts left Other factors Future expectations today V tomorrow Number of buyers Multiple Market Effects Goods are often related 0 Complements amp substitutes This means that one economic event can affect multiple markets in different ways
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