👨‍🏫 Notes on E-1000 Lecture 2

Demand

Individual demand vs. Market Demand:
Individual demand = q
Market demand = Q

Determinants of individual demand

• Price
• Income
  • Normal goods: Goods whose demand increases when income increases
  • Inferior goods: Goods whose demand decreases when income increases (ramen noodles & spam)
• Price of Related Goods
  • Substitutes: Demand goes up when the price of a substitute goes up (hot dogs & hamburgers)
  • Complements: Demand goes down when the price of a complement goes up (hamburger buns & hamburgers)
• Tastes and Preferences
• Expectations

Determinants of Market Demand

• Market demand is made up the quantity demanded by many individuals, so anything that shifts individual demand will also shift market demand.
• Number of consumers also shifts market demand.

Demand Schedule is just the demand curve but in in tabular format:

Supply

The discussion of supply parallels the discussion of demand and replicates everything above, just from the other side of the market.

This slide is noteworthy.