Econ 2010

Econ 2010 - ECON 2010 14/01/2008 12:32:00 Economics the...

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Unformatted text preview: ECON 2010 14/01/2008 12:32:00 Economics the manner in which societies go about provisioning themselves with the material means of existence. Macro-looking at the whole economy Demand No such thing as supply/demand Market-an exchange of goods/services for money Pattern of behavior o Demand=buying Demand-the willingness and ability to purchase goods/services at various prices Quantity demanded-the specific amount of a good or service purchased at a specific price Higher price less amount bought Res price the max amount a person is willing and able to purchase a good Determinants of demand: o Income-if income increases higher demand for normal goods, lower income higher demand for inferior goods o Price of related goods Substitutes- if P1 goes up then D2 goes up Compliments-If P1 goes up then D2 goes down o Tastes and preferences-If you like something you will demand more of it o Expectations-if you expect the price to be lower in the future than the demand will go down today, if you expect your future income to increase than you will buy more normal goods today o Number of buyers- if there are more buyers in the market than demand will increase Supply Selling instead of buying, the ability and willingness to sell at various prices Quantity supplied-the specific amount of a good or service someone is willing and able to be sold at a specific price If price goes up you are going to be more willing to sell (if buyers dont like it then you do) Turn a profit not make more money Reservation price-the min price that you are willing and able to sell something Determinates of supply o Labor cost-if you have higher costs to sell then you decrease supply o Other input costs-higher cost of inputs less selling o Productivity-output per worker per hour higher productivity higher supply o Expectations-future price is lower we are going to sell now so sell more o Number of sellers-If there are more suppliers in the market then supply will go up Market Equilibrium and Disequilibrium Equilibrium-no incentive to change (Dominant Strategy Game Theory) behavior on either side o Quantity supplied=Quantity demanded Disequilibrium o Surplus excess of sellers not enough buyers o Shortage excess of buyers not enough sellers If allowed to do so market will return to equilibrium How is the market going to be affected Macroeconomics Economic Growth o Definition-depends on the passage of time, shows the expansion of the ability for an economy to produce stuff o In most places just to maintain standards of living we have to have...
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Econ 2010 - ECON 2010 14/01/2008 12:32:00 Economics the...

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