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Econ102February4 - x = number demanded i Px = X’s price...

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Econ 102 February 4, 2008 I. Simple Model of a Free Market Economy a. Buyers and sellers are free to trade b. Many markets c. Private ownership of factors of production d. Buyers maximize utility subject to their preferences and market constraints e. Sellers maximize profits subject to technologies and market constraints f. Perfectly competitive- everyone is a price taker g. Trade is voluntary II. Demand Concepts a. The Demand function for X: Q x D =f(P X , P S , P C , I, T&P, Pop) b. Where: Q
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Unformatted text preview: x = number demanded i. Px = X’s price ii. Ps= Price of substitute iii. Pc = price of compliments iv. I = income v. T&P = tastes and preferences vi. Pop = population in market or market size III. The demand curve describes the relationship between a goods own price and the maximum quantity that consumers are willing and able to buy at that price, ceteris paribus (holding all other variables constant at some given level)...
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