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Week 3 Supply and Demand (Law of Supply (Shifts in supply (Shift in supply…

- - - - Normal Good
        
        Good of when we buy more when we earn more
      - Inferior Good
        
        Good of which we buy less of when we earn more money
    - - Complements
        
        Goods and services used together
      - Substitutes
        
        Goods and services that can be used in place of each other
- - - - Caused by change in the price of a good
      - Direct relationship between price and QS
    - - Caused by non price factors
      - Entire supply curve will shift to the left or right
      - Examples include: Changes in input costs, technology, taxes, expectations and number of sellers
      - Input prices
        
        Inverse relationship between input prices and supply
- - - - Qd > Qs
      - Occurs at any price below equilibrium
      - Price will rise over time towards equilibrium. why?
    - - Qs < Qd
      - Occurs at any price above equilibrium
      - Price will fall overtime towards equilibrium