11/7/11

• At each price you sum up the quantities for all people involved to get the market quantity 
• Comparative Statics: what things impact how much we buy?
• Prices of the Good in question
• "Other Stuff"
• if this is the cause, changes the way you think about prices
• aka Changes in Demand 
• Income
• price does not change yet you buy more of the good then demand shifts out
• more income does not mean you'll consume more
• income increases, quantity demanded increases because some goods are perceived as "normal" goods
• normal goods vs. inferior goods
• Prices of other things
• substitutes vs. complements
• ability
• Expectations
• future prospects
• price of substitutes 
• willingness
• 'Tastes'
• # of participants              
• Preferences: subjective by nature
• "Normal" Goods = quantity demanded increases when income increases and quantity demanded decreases when income decreases ( direct relationship)
• "Inferior" Goods = quantity demanded deceases when income increases and quantity demanded increases when income decreases (inverse relationship)
• Substitutes
• replacements
• only classified as substitutes if the relationship between the goods (inverse relationship) contributes to the claim
• Complements
• goods which augment the other; they go together
• hot sauce's price increases, you consume less burritos because you use hot sauce for burritos 
• Elasticity:  How  much more!
• price change effects consumption = elastic
• price change does not effect consumption = inelastic
• anything can be measured in regards to elasticity 
• Own Price Elasticity of Demand
• it is the % change in quantity demanded/ % change in price 
• ex: 50%/25% = 2