January 11, 2016
Demand
: the quantities that people are willing and able to buy at various prices
The Law of Demand : when there is an inverse relationship between price and quantity demanded
What causes a "change in quantity demanded"?
- change in price
What causes a "change in demand"?
- Change in buyer's taste: (advertise)
- Change in the number of buyers: (population)
- Change in price of related goods: (complementary/ substitute)
- Change in income: (normal/ inferior goods)
- Change in expectations: (future)
Supply
: the quantities that producers or sellers are willing or able to produce at various prices
The Law of Supply : direct relationship between price and quantity supplied
What causes a " change in quantity supplied"?
- change in price
What causes a "change in supply"?
- change in weather
- change in the number of sellers
- change in the cost of production
- change in technology
- change in expectations
- change in taxes or subsidies
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