Notes On Economics

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Demand
Demand- Quantities that consumers are willing and able to buy per period of time at various prices
Law of demand- Higher the price= lower the quantity purchased
Demand curve- Shows relationship for a product or service- can be linear or curved
Change in quantity demanded- Change in price of product resulting in the change in quantity demanded
Ceteris Paribus- Demand is the relationship between the price of a product and the quantities demanded
Demand schedule- Amounts per week/time that someone is willing and able to purchase at the various prices.
When there is a surge in demand but limited supplies, prices will increase
Demand curve slopes downwards because- 1) Income effect 2) Substitution effect
When you are more able (Income) and more willing (substitution) you may buy more quantity of it
Price+quantity=Demand
First factor- Demand
Second factor- Income (Normal Products- demand increases due to income increase, Inferior Products- Demand increases due to decrease in income)
Third Factor- Prices of related products (Substitute product- Demand varies with a change in price of a similar product, Complementary product- Purchased together)
Fourth factor- Expectations for the future (Expected prices and income affects our present demand for a product)
Aging population
Supply
Supply- Quantities that producers are willing and able to get to sell per period of time at various prices
Law of Supply- Direct relationship between prices and quantity supplied
Supply curve- Shows relationship for a product or service
Increase in price leads to increase in quantity supplied, movement up supply curve
Decrease in price leads to decrease in quantity supplied, movement downwards
Market supply- Total supply of a product offered by all producers
Lower prices induce consumers to buy more, but supplies cut back output
Company supply+All supply=Market supply
Increase in supply causes supply curve to shift right
Surplus makes producers drop prices to increase sales
Surplus causes prices to fall
Shortage causes prices to rise
Determents in supply
Prices of resources, 2. Business taxes 3. Technology (cost per unit of output affecting profits 4. Production substitutes 5. Future expectations 6. #of suppliers
Increase in supply is caused by
1. Decrease in price of resources 2.
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