Lecture 6 1.11.08

Lecture 6 1.11.08 - Law of supply – the higher the price...

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1.11.08 Ch 3 Quantitiy demand – the amount of a good or service that consumers plan to buy during a given time period at a particular prices Demand – the entire relationship between the price of a good and quantity demand (ceterins paribus) Law of demand – ceteri’s paribus, the lower the price of a good, the larger is the quantity demanded of it (ex Gucci/Versace/Ferrari) Charge in quantity demanded: a change in buyers’ plans that occurs when the P of a good changes (ceteris paribus) represented by a movement of the demand curve. Change in demand: a change in buyer’s plans that occur when some influence on those plans, other than the prices, charges. Ie preferences, income. The curve shifts Complement: Substitute: Normal: when demand increases as income increases Inferior: increase in $ demand shifts left Supply Quantity supplied: the amount of a good or service that produces plan to sell during a time period at a particular price Supply: the entire relationship between the price of a good and the quantity supplied of it
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Unformatted text preview: Law of supply – the higher the price of a good, the greater the quantity supplied of it Change in quantity supplied: a change in seller’s plans that occurs when the price of a good changes Change in supply: a change in sellers’ plans that occurs when some influence on these plan, other than the price of the good changes (ie producers change in cost of production – graph shifts (supply curve) left /right Competetitive market – a market that has many buyers sellers ; so no single buyer or seller can influence the price Equilibnrium price: the price at which the quantity odemand = quantity supplied Equilibrium supply Money price: the # of dollars that must be gien up in exchange fo a good or servces price tag Nominal price: the same as money Real price= the same meaning as relative; the ratio of the price of one good or serbie pto the price of another good or service-Relative price is the opportunity cost...
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Lecture 6 1.11.08 - Law of supply – the higher the price...

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