02-16 0 Shifts in the Demand Curve Prices of Related Goods - When a fall in the price of one good reduces the demand for another good,the two goods are called substitutes. When a fall in the price of one good increases the demand for another good,the two goods are called complements. Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 02-16 Shifts in the Demand Curve • Prices of Related Goods – When a fall in the price of one good reduces the demand for another good, the two goods are called substitutes. – When a fall in the price of one good increases the demand for another good, the two goods are called complements
490 02-17 Individual demand and market demand Market demand is the sum of all the individual demand Market demand function:supposeQ=a-bP,Q2=a2-b2P then:Q=a-bP,and,Q=Q+Q2,a=a+a2, b=b1+b2 Market demand curve: p D2 0 Q11Q12 Q10Q21Q22 Q20 Q1 Q2 Qd Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 02-17 Individual demand and market demand • Market demand is the sum of all the individual demand Market demand function:supposeQ1=a1-b1P， Q2=a2-b2P then：Qd=a-bP， and，Qd=Q1＋Q2 ，a=a1＋a2 ， b＝ b1＋b2 Market demand curve： p p p Q1 Q2 Qd D1 D2 D o o o P1 P2 Q11Q12 Q21Q22 Q1 Q2