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→Introduction
In this course we have covered the supply and demand curves, and examined the economic concept of “elasticity”. Now we turn to focus solely on “demand”.
In this course we have covered the supply and demand curves, and examined the economic concept of “elasticity”. Now we turn to focus solely on “demand”.
Demand is determined by price. Generally, the higher the price for a particularly good, the lower the quantity demanded. Conversely, as technological advances cause reduction in prices, the quantity demanded increases. Far more people own computers today than when they were first introduced over twenty years ago. Why? One reason is because computers are cheaper today.
Demand is determined by price. Generally, the higher the price for a particular good, the lower the quantity demanded. Conversely, as technological advances cause reduction in prices, the quantity demanded increases. Far more people own computers today than when they were first introduced over twenty years ago. Why? One reason is because computers are cheaper today.
The sensitivity of the quantity demanded to a change in price is measured by the elasticity, which we discussed in the last lecture. This time, we are going to focus on other aspects of “demand”.
The sensitivity of the quantity demanded to a change in price is measured by the elasticity, which we discussed in the last lecture. This time, we are going to focus on other aspects of “demand”.
By comparing a change in price of a good to the change in the CPI, you can tell whether the real price of the good is becoming more or less expensive. If the good’s price increases by less than the CPI’s increase, then the good has a real price that is falling.
By comparing a change in price of a good to the change in the CPI, you can tell whether the real price of the good is becoming more or less expensive. If the good’s price increases by less than the CPI’s increase, then the good has a real price that is falling.
==Income and Substitution Effects==
==Income and Substitution Effects==