Economics and Society
Economics and Society ECON 2100
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This 1 page Class Notes was uploaded by Destinee Auer on Monday October 12, 2015. The Class Notes belongs to ECON 2100 at Georgia College & State University taught by Leslee Conaway in Fall. Since its upload, it has received 8 views. For similar materials see /class/221950/econ-2100-georgia-college-state-university in Economcs at Georgia College & State University.
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Date Created: 10/12/15
HOW DO SUPPLY AND DEMAND WORK Demand from consumers point of view how much you are willing to pay for every unit of good 2 Ways to define value 1Market Value the observed price for a unit of a good What you must give up to get a unit of the good 2 Use Value the absolute most you would be willing to pat to get what you want This is what demand represents WHAT DOES A DEMAND CURVE LOOK LIKE Principle of Diminishing Marginal Benefit the more of a good you have in a given time period the less you are going to be willing to pay for another unit The curve go down Law of Demand Ceteris paribus all other factors held constant the higher the price of a good the lower the quantity demanded for that good quantity demanded is the number of units you buy change in the price of a good only changes the quality demanded or how many gallons you purchase milk Change in price never changes your demand for it how much you re willing to pay Market Demand summation of all individual demand curves for a good down slopes too WHAT DOES A CHANGE IN DEMAND LOOK LIKE AND WHAT CAUSES IT When the demand goes up the graph will shift to the rightdecrease to left ncrease Willing to pay more for this good than originally DecreaseWilling to pay less for this good than originally Change in quality demanded a movement from one point to another on the same demand curve CHANGES IN DEMAND ARE CAUSED BY CHANGES IN Demand Shifters change how much you are willing to pay 1 Consumer Income Normal Goodsif your income increases you will pay more for normal goods nferior Goods Income difference doesn t change amount you are willing to pay 2 Prices of Related Goods A change in the price of coffee would cause a change in the quantity of coffee demanded Not the demand for coffee But a change in the prices of sugar and creamer related goods would cause a change in the demand for coffee Related Goods can be Complements goods you tend to use together ubstitutes goods you can typically substitute for one another 3 2 Vector Category Everything other than 1amp2 that changes your willingness to pay for a good EX quality seasons SUPPLY Supply from the producers point of view shows how much it costs to make each unit Principle of Rising Marginal Cost each unit that you make is going to cost more to make than the unit before it Supply curves are upward slopping positive slope Market Supply summation of all individual sellers supply curves SupplyProduction Cost Law of Supply ceteris paribusthe higher the price of the good the higher the quality supplied of that good Quantity supplied is the number of units a seller is willing to sell at a particular price
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