Module 46 by h30102김가영 https://padlet.com/23h30102/c9fkgsek4t8u5pe9 en-us 2023-08-10 16:54:05 UTC 2023-08-10 19:48:06 UTC hello@padlet.com Definitions 23h30102 https://padlet.com/23h30102/c9fkgsek4t8u5pe9/wish/2659596818 - Substitution effect: change in the quantity of that good demanded as the consumer substitutes the good that has become relatively cheaper for the good that has become relatively more expensive.
- Income effect: change in the quantity of that good demanded that results from a change in the consumer’s purchasing power when the price of the good changes.
  • real income: adjusted income to reflect its true purchasing power.
  • money income/nominal income: when the income has not been adjusted.
]]> 2023-08-10 17:05:38 UTC https://padlet.com/23h30102/c9fkgsek4t8u5pe9/wish/2659596818 Definitions 23h30102 https://padlet.com/23h30102/c9fkgsek4t8u5pe9/wish/2659603594 - Substitution effect
  • happens whenever the price of one product changes (increase/decrease).
  • if there is two goods, people will consume more of cheap good rather than paying more of the other good.

- Income effect
  • happens whenever the price of individual's income changes (increase/decrease).
  • if there is price change of one's income, people will change the level of their spending according to their income level.
]]> 2023-08-10 17:17:11 UTC https://padlet.com/23h30102/c9fkgsek4t8u5pe9/wish/2659603594 Differences 23h30102 https://padlet.com/23h30102/c9fkgsek4t8u5pe9/wish/2659608321 - income effect is unnecessary and has no significant effect on individual consumption for most of goods and services.
  • most market demand curves slope downward solely because of the substitution effect.
- income effect usually reinforces the substitution effect , when the price of a good that absorbs a substantial share of income rises.
]]> 2023-08-10 17:25:47 UTC https://padlet.com/23h30102/c9fkgsek4t8u5pe9/wish/2659608321 Better to know 23h30102 https://padlet.com/23h30102/c9fkgsek4t8u5pe9/wish/2659662629
  • normal good: good that see a rise in demand when incomes rise.
  • inferior good: good that see a decrease in demand as incomes rise.

    • - price elasticity of demand 
    • rise in price leads to a negative percent change in the quantity demanded; fall in price leads to a positive percent
      change in the quantity demanded
    ]]>     2023-08-10 18:57:57 UTC https://padlet.com/23h30102/c9fkgsek4t8u5pe9/wish/2659662629     Elasticity 23h30102 https://padlet.com/23h30102/c9fkgsek4t8u5pe9/wish/2659673820 - dependent and independent variable 
    - measures the responsiveness of one variable to changes in another
    - ]]>     2023-08-10 19:18:06 UTC https://padlet.com/23h30102/c9fkgsek4t8u5pe9/wish/2659673820     Price Elasticity of Demand 23h30102 https://padlet.com/23h30102/c9fkgsek4t8u5pe9/wish/2659681745 - negative no.
    - ratio of the percentage change in quantity demanded of a product to the percentage change in price.
    - compares the percent change in quantity demanded with the percent change in price.
    - how to calculate:
    1. Calculate the percent change in the quantity demanded and the corresponding percent change in the price as we move along the demand curve.
    2. Find the ratio of the percent change in the quantity demanded to the percent change in the price.]]>     2023-08-10 19:35:07 UTC https://padlet.com/23h30102/c9fkgsek4t8u5pe9/wish/2659681745     Midpoint method 23h30102 https://padlet.com/23h30102/c9fkgsek4t8u5pe9/wish/2659686962 - also known as arc method
    - technique for calculating the percent change by dividing
    the change in a variable by the average, or midpoint, of the initial and final values of that variable.
    - helps to avoid computing different elasticity for rising and
    falling prices
    - in calculation, both the percent change in the price and the percent change in the quantity demanded are found using average values.]]>     2023-08-10 19:47:55 UTC https://padlet.com/23h30102/c9fkgsek4t8u5pe9/wish/2659686962