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Module 2 Microecon - Coggle Diagram
Module 2 Microecon
Law of Demand
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Price goes down = More purchasing power because able to buy more with same amount of money.
Price goes up = Less purchasing power because able to buy less with same amount of money.
3, Law of Diminishing Marginal Utility
The more you have of something, the less benefit each additional item adds.
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Demand Curve
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Change in demand = shift of curve to the right (increased demand) shift of curve left (decreased demand)
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Number of consumers ex: 1000 consumers can buy a small amount of the good but still add up to a large amount of goods purchase.
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Complements: If burger buns are more expensive, ground beef purchases may go down.
Inferior goods such as used goods correlate negatively with income and quality and luxury goods correlate posi
Assume all outside factors are constant, known as ceteris paribus- ex: consumer income
Graph of price vs. quantity demanded, usually inverse relationship.
Law of Supply
Incentives
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Determinants of supply
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Expectations about the future ex: If companies think prices will go up they'll reduce supply so they can sell more later
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Government action ex: taxes production of milk, supply of milk goes down or subsidies on corn increase the corn supply
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