Econ: Unit 2 Supply Curve & Demand Curve

law of supply

as prices increase, the quantity supplied increases; producers/sellers determine supply

4 determinants of supply

1. changes in cost of production

2. changes in technology

3. change in number of sellers

4. changes in expectations

law of demand

decrease in price of a good causes an increase in the quantity demanded

law of diminishing utility

ex: when you’re thirsty, the more glasses of water you drink, the less you’ll need additional water

income effect

when the price goes down, you feel richer because your purchasing power has increased

6 determinants of demand

1. change in income

2. change in price of substitutes

3. change in price of complementary goods

4. change in population

5. change in expectations

6. change in taste