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Suppose universities prohibit the use of notebook computers Chapter 3 - Demand Supply Suppose the federal government gives every student a notebook computer 16
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The Determinants of Demand Income: Normal Good Increase in income increases demand Decrease in income decreases demand Chapter 3 - Demand Supply 23
The Determinants of Demand Income: Inferior Good Decrease in income increases demand Increase in income decreases demand Chapter 3 - Demand Supply 24
The Determinants of Demand Tastes and Preferences Hybrid vehicles • Increase in demand SUVs • Decrease in demand Chapter 3 - Demand Supply 25
The Determinants of Demand Price of Related Goods: Substitutes Butter and Margarine • Price of both = $2/lb • Price of margarine increases to $3/lb • Demand for butter increases Chapter 3 - Demand Supply 26
The Determinants of Demand Price of Related Goods: Complements Speakers and Amplifiers • Decrease the relative price of amplifiers • Demand for speakers increases Speakers and Amplifiers • Increase the relative price of amplifiers • Demand for speakers decreases Chapter 3 - Demand Supply 27
The Determinants of Demand Expectations: Income, Future Prices A higher income or expectations of a higher future price will increase demand A lower income or expectations of a lower future price will decrease demand Chapter 3 - Demand Supply 28
The Determinants of Demand Market Size (Number of Buyers) Increase in the number of buyers increases demand Decrease in the number of buyers decreases demand Chapter 3 - Demand Supply 29
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A change in the price changes the quantity of a good demanded, movement along the curve Chapter 3 - Demand Supply 32
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If costs increase, supply decreases If costs decrease, supply increases If some other factor than price changes, the only way we can show its effect is by moving the entire supply curve Chapter 3 - Demand Supply 43
Price per Flash Memory Pen Drive ($) When supply increases the quantity supplied will be greater at each price Chapter 3 - Demand Supply 44
Price per Flash Memory Pen Drive ($) When supply increases the quantity supplied will be greater at each price Chapter 3 - Demand Supply 45
Price per Flash Memory Pen Drive ($) When supply decreases the quantity supplied will be less at each price Chapter 3 - Demand Supply 46
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The Determinants of Supply Cost of Inputs Increase in cost decreases supply Decrease in cost increases supply Chapter 3 - Demand Supply 48
The Determinants of Supply Technology and Productivity Decreases in productivity decrease supply Improvements in technology or increases in productivity increase supply Chapter 3 - Demand Supply 49
The Determinants of Supply Taxes and Subsidies Increases in taxes or decreases in subsidies decrease supply Decreases in taxes or increases in subsidies increase supply Chapter 3 - Demand Supply 50
The Determinants of Supply Price Expectations of higher future prices decrease supply Expectations of lower future prices increase supply Chapter 3 - Demand Supply 51
The Determinants of Supply Number of Firms in Industry Decrease in the number of firms decreases supply Increase in the number of firms increases supply Chapter 3 - Demand Supply 52
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