SS 141 2.3.16 pt 2 - SS 141 2.3.16 Chapter 4 Supply and...

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SS 141 2.3.16 Chapter 4: Supply and Demand: An Initial Look The Invisible Hand Adam Smith and the “Invisible Hand” o By Pursuing their own self interests, people in a market system are “led by an invisible hand” to promote the well-being of the community Self interest does not mean selfish “Invisible hand” means not peoples intent What happens when we interfere with the market? o Usury laws, laws against scalping Demand And Quantity Demanded Quantity demanded o Number of units of a good that consumers are willing and can afford to buy over s specialized period of time o Depends on price, other things equal Demand Schedule o Is a table of the quantity demanded of a good at different price levels. Thus, given the price level, it is easy to determine the expected quantity demanded . If shift occurs price hasn’t changed quantity has changed If movement occurs price has changed Demand and Quantity Demanded What can cause the demand curve to shift? o Consumer Income o Population: Size and composition o Consumer Preferences (tastes) Prices of related goods o Substitutes o Complements
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