Chapter 6 Study Guide

Chapter 6 Study Guide - Chapter Six The Best Quantity and...

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Chapter Six The Best Quantity and Price Decreasing Abstraction – Increasing complexity and realism. Price Searcher – A seller the demand for whose product slopes downward. Since a downward sloping demand curve means some customers are willing to pay more than others, clever price-searchers can sometimes devise ways to charge different prices to different customers, according to how much they’re willing to pay. That’s called price discrimination. Price Takers and Marginal Revenue The Price Taker “Price taker” is a code for the word “horizontal.” If a potential buyer is a price taker, it’s the supply curve of the good to him that is a horizontal line. At some specific price; he “takes” that price, but is free to choose the quantity that best suits him. If a potential seller is a price taker, it’s the demand curve for his product that is horizontal, at some specific price. He takes that price and chooses the quantity to sell that most benefits him. It’s the fact that price takers have no decision to make regarding price, and are simply
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This note was uploaded on 04/18/2008 for the course ECON 201 taught by Professor Egger during the Fall '06 term at Towson.

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Chapter 6 Study Guide - Chapter Six The Best Quantity and...

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