Class summary 11/7

Feom Individual à Market Demand

Rachel: $3-Q1, $1-Q3

Mike: $3-Q2, $1-Q6

“The Market” for Burritos: $3-Q3, $1-Q7 (add together)

Shape of market demand vs individual

Can we aggregate further?

Quantity Demand: ability and willingness to consume a good

Comparative statics

What changes your consumption?

1.     own price

2.     everything else

Other factors change your consumption:

a.     Income (ability)

b.     Substitutes (ability)

c.      Expectation (willingness)

d.     Taste (willingness)

e.     # of individuals (willingness)

Price $1à$3, Quantity 8à4 ( Change in Quantity Demanded : movement along the demand curve)

Market for Burritos

Price $3, Quantity 4.

Price $3, Quantity 8.

Demand shifts out, demand increases (at the same price)

Price $3, Quantity 0.

Demand shifts in, demand decreases

Income (not prices):

a.     normal goods (when income increases, demand quantity goes up)

b.     inferior goods ( when income increases, demand quantity goes down)

“Prices” of other goods

a.     substitutes (demand curve shifts out)

b.     complements (demand curve shifts in)