Supply and Demand
Complement Good
A complement good is used together with another good. An increase in the price of a complement good causes a decrease in demand (leftward shift). a decrease in the price of a complement good causes an increase in demand.
Decrease in Demand
A decrease in demand results when the quantity demanded decreases for every price. A decrease in demand is shown by a left ward shift of the demand curve. ( quantity demanded is smaller).
Normal Good
A normal good is defined as a good where demand increases when income increases. likewise when income decreases, demand will also decrease.
Inferior good
AN inferior good is defined as a good where demand decreases when income increases. like wise demand increases when income decreases.
Increase in Demand
An increase in demand results when the quantity demanded increases for every price. An increase in demand causes a rightward shift of the demand curve. (quantity demanded is larger).
Population
An increase in population will cause to an increase in the demand for goods . a decrease in the population will cause a decrease in demand for goods.
Increasing supply
An increase in supply results when the quantity supplied increases for every price. An increase in supply is shown by a rightward shift in the supply curve.
Example of Complement good
Chicken nuggets and fries are complementary goods. if the price for chicken nuggets increases, consumers will decrease the quantity demanded for chicken nuggets and, will demand less fries.
Good X and Y being substitutes example
Coke and pepsi are substitute goods. if the price of coke increases, consumers will decrease the quantity demanded for coke and will substitute by demanding more pepsi ( quantity demanded for pepsi will go up).
Factors shifting demand curve 2.
Factors that cause a shift in the demand curve are caused by changes in variables not measured on either axis.
Substitute good
It can be used in place of another good. an increase in the price of a substitute good causes an increase in demand(right ward shift). a decrease in the price of a substitute causes a decrease in demand( left ward shift).
A competitive Market has..
It has many buyers and sellers where neither any buyer nor any seller has control over the price.
Factors shifting supply curve
Movement along the supply curve are caused by changes in the price of a good b/c it is on the vertical axis. other factors are: Changes in the price of factors of production, prices of related goods, expected future prices, number of suppliers and technology.
Factors shifting the demand curve 1.
Movements along the demand curve are caused by changes in the price of a good because price is measured along the vertical axis.
Price of related good
Price change causes a movement along the demand curve for one of the goods but a shift in the other good.
Example of inferior good
Ramen noodles is an inferior good. when you're in college and, broke . you're more likely to eat ramen noodles than when you graduate and, have a little bit more money .
Example of normal good
Restaurant meals are normal goods, when your salary goes up , your more likely to eat at a restaurant.
Slope of the demand curve
The demand curve has a negative slope because, as the price increases the quantity demanded decreases.
Demand
The demand refers to the entire relantionship between price and the quantity demanded. a point on the demand curve shows the quantity demanded at a given price.
Some other factors shifting demand curve
The price of related goods, income, expected future price, expected future income and, population.
Supply
The quantity supplied of a good is the amount ( quantity) of a good producers plan to sell at a given point in time for a given price. pirice and quantity supplied are directly proportional , price goes up , the quantity supplied also goes up.
Supply and Demand Model
The supply and demand model is used to determine the relative price of goods and to show how these prices change when there are changes in factors related to supply and demand.
Price and quantity demanded are..
They are inversely related , as the price decreases, the quantity demanded would increase. it is also known as the law of demand.
Slope of the supplied curve
They have a positive slope. a movement along the supply curve shows the change in quantity supplied that results from a change in the price of the good.
Movement up the demand curve
This happens when the price and the quantity supplied both decreases.
Decrease supply
a decrease in supply results when the quantity supplied decreases for every price. grpah wise , a decrease in supply is shown by a leftward shift in the supply curve.
Movement up the demand curve
for example: if the price increase from 35 to 45 , the quantity demanded would decrease from 15 to 10, this will cause a movement up the demand curve.
Preferences/Advertising
if effective , increase in advertising of a good will increase the demand. decrease in advertising will cause a decrease in demand.
Expected future price
if the price of a good is expected to increase in the future, the opportunity cost of buying it in the future is higher than if you bought it now. As a result the demand for the good increases at the moment. Like wise if the price is expected to fall in the future , the opp cost of buying it now is higher. and , the demand of the cost is lower.
Movement Along the demand curve
it shows the change in quantity demanded that results from a change in the price of the good.
Plotting on the demand curve
the quantity demanded is on the horizontal axis (x-axis) , the price is on the vertical axis(Y-Axis).
Quantity Demanded
the quantity demanded of a good is the amount (quantity) of a good consumers plan to buy for a given price, ceteris paribus.
Expected income
when it is expected that income will increase, the demand for normal goods will increase at the moment. if you expect that you will lose your job in the future , you will demand less normal goods and start eating inferior goods like ramen noodles to try to save money.
