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ECON 102 Lecture - Demand: Substitutes

The document summarizes key concepts in demand, including: 1) The demand curve has a negative slope, showing an inverse relationship between price and quantity demanded. 2) Substitutes and complements affect demand - if a substitute's price falls, demand decreases, and if a complement's price rises, demand falls. 3) A shift in the demand curve indicates a change in demand, while movement along the curve shows a change in quantity demanded at a given price.

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25 views4 pages

ECON 102 Lecture - Demand: Substitutes

The document summarizes key concepts in demand, including: 1) The demand curve has a negative slope, showing an inverse relationship between price and quantity demanded. 2) Substitutes and complements affect demand - if a substitute's price falls, demand decreases, and if a complement's price rises, demand falls. 3) A shift in the demand curve indicates a change in demand, while movement along the curve shows a change in quantity demanded at a given price.

Uploaded by

QuinnNgo
Copyright
© © All Rights Reserved
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Download as DOCX, PDF, TXT or read online on Scribd
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ECON 102 Lecture - Demand

9/2/2014 4:33:00 PM

TEST 1: CHAPTER 4-6, also specified pages


Demand curve negative slope to price; inverse relationship to price
Supply curve positive slope to price
Inferior goods always narrowly defined commodities
Substitutes
If the price of a substitute falls, there will be a decrease in demand.
EX. If hamburgers go down in price, pizza will go down in demand
because the hamburgers look more attractive to consumers
EX. Conversely, if pizza goes up in price from $10 to $100,
hamburgers will go up in demand, as they seem relatively cheap.
So, demand will go in the SAME direction as substitute pricing. Substitute
price increases, demand increases. Substitute price decreases, demand
decreases.
Compliments
If the price of a compliment rises, then the demand will fall.
EX. If the price for gas was $1000/gallon, demand for automotive
services would decrease.

EX. If the price for gas was $.01/gallon, demand for automotive
services would increase.

SHIFT in the demand curve entire line moves; change in demand


MOVEMENT along the demand curve point moves along the line; change in
QUANTITY demanded

ECON 102 Lecture - Supply


Relationship between price and quantity supplied
Page 75
Positive slope

9/2/2014 4:33:00 PM

Past Test Questions

9/2/2014 4:33:00 PM

Camping equipment is a normal good. What happens when the economy


improves?

9/2/2014 4:33:00 PM
Page 70!!!

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