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Unit 2: Supply / Demand - Coggle Diagram
Unit 2: Supply / Demand
Demand
Def:the quantity of demand that buyers (consumers) are willing and able to buy at various prices over a time period, ceteris paribus
Law of Demand :
the higher the price, the lower the quantity demanded
--> inverse relationship
--> why the demand curve is downward sloping
Determinants of Demand:
1) changes in tastes and preferences
2) changes in the number of buyers
3) changes in income
--> normal goods and inferior goods
4) changes in prices of related goods
--> substitutes & complements
5) Expectations
6) # of potential buyers
7) Demographic change
8) Seasonal Changes
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Supply
Def: the quantity of a good that sellers (firms) are willing and able to produce at various prices over a time period, ceteris paribus
Law of Supply:
the higher the price, the higher the quantity supplied
--> positive causal relationship
Determinants of supply:
1) cost of production
2) productivity
3) government intervention (taxes & subsidies)
4) price of related goods
5) supply shock
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