Page 8 - FINAL CFA SLIDES DECEMBER 2018 DAY 5
P. 8
Session Unit 4:
14. Topics in Demand & Supply Analysis, p. 1
LOS 14.c: Distinguish between normal goods and inferior goods, p. 9
+ for Normal goods –home/car? – for inferior goods – Car type?
A Giffen good is an inferior good for which the negative income effect outweighs the positive
substitution effect when price falls –Upward sloping demand curve!
A Veblen (luxury) good is one for which a higher price makes the good more desirable (e.g., Gucci bag),
positive sloping demand curve!
LOS 14.d: Describe the phenomenon of diminishing marginal returns, p.9
Factors of production:
Land, Labor, Capital,
Materials.
Fix capital (PPE) and add workers,
you get increasing growth (MP),
decreasing growth (DMP) and
negative growth (DMP/R)
