Transcript Goods, change in demand and Qd

• Economic goods
• Definition: An economic good is any
good that is insufficient to satisfy all our
wants, i.e. it is scarce.
• As people prefer to have more of it, they
are willing to pay for it or to give up
something to get it. And the opportunity
cost of it in production is positive.
•The 9-year free education in Hong Kong, from the point
of view of the Whole Society, it is not ‘free’.
•On one hand, at lease some people in Hong Kong prefer
to have more free education at this moment.
•On the other hand, the resources used in providing free
education have alternative uses, i.e. the resources are scarce.
In other words, the provision of free education involves
opportunity cost to the society.
•Definition: Any good whose quantity is
sufficient to all satisfy all our wants, i.e. it is not
scarce.
•As people do not prefer to have more of it,
they will not pay for it or to give up something
to get it. The opportunity cost of it in
production is zero. So the 9-year free education
is not a free good.
• Air is a free good in normal circumstances but it
is “ scarce” under water or at the top of a mountain.
• Oxygen on low land is free good because its
quantity available can satisfy all our wants.
• Ice in North and South Poles is free good
because no one prefers more of it.
•Definition: Goods produced for direct use of
consumption.
•E.g. Air-conditioner, television and telephone
used at home.
telephone
television
Air-conditioner
•Definition: Goods produced for production of
other goods.
•E.g. telephone used in airport because those
telephones used in the airport are produced for
assisting the production of airport service.
coin telephone
• Definition of Quantity demanded:
Quantity demanded is the planned quantity
consumers are willing and able to buy at a given price.
• Change in quantity demanded:
It is caused by a change in a good’s price and it is shown
by a movement along the demand curve.
increase in quantity demanded
decrease in quantity demanded
• In the summer holiday, many students are ready for back to
school. They need to buy schoolbag before they go to school. To
attract more business, many companies will lower the price of
schoolbag.
• As the price of schoolbag decrease, the quantity demanded of
schoolbag will increase. It is shown by a movement along the same
demand curve because it is caused by its price change.
Increase in quantity demanded
for schoolbag
•Definition of Demand:
Demand refers to quantity demanded at all given
prices.
• Change in Demand:
It is caused by change in non-price factors like
weather and taste. It is showed by a shift of the
demand curve.
Increase in demand
Decrease in demand
• Hong Kong is facing the economic recession nowadays,
therefore the income of people decreases. As they earn
less money than before, they will travel less by taxi. As a
result, the demand for taxi will drop.
• In this case, taxi is a normal good.
Decrease in demand
for taxi
• Hong Kong is facing the economic recession
nowadays, therefore the income of people decrease. As
they earn less money than before, more people will
prefer to have bread as their lunch. As a result, the
demand for bread will increase.
• In this case, bread is an abnormal good.
Increase in demand
for bread
Group members:
Ricky (27)
Emily (29)
Yumi (34)
~The end~