Feb 5 - • Income and Substitution Effects • The higher...

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Lecture  05/02/2008 09:30:00 HOMEWORK (on stickies): Also:  In some market demand and supply are given by: P O Markets: Demand and Supply 1. Demand and WTP (willingness to pay) Law of Supply and Demand o As the price goes down, more people want to buy it  o People buy expensive stuff to advertise that they CAN buy this  expensive stuff to own Shifters o Demand Curve o represents consumers - their willingness to pay o Quantity (x-axis); Price (y-axis) o shifters of a demand curve (always held constant): income tasters P of complements P of substitutes # of consumers Future expectations 
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Unformatted text preview: • Income and Substitution Effects • The higher the income you have, the more stuff you buy • inferior good- canned vegetables; when we have more income, we tend to buy less canned vegetables • as the price of something falls, relative to something else, we buy more of it 2. Supply and WTA (willingness to accept) • shifters o technological changes o input prices o # of producers o P of other goods ← 3. Market demand and supply • horizontal summation ← 4. equilibrium ← 05/02/2008 09:30:00 ← 05/02/2008 09:30:00 ←...
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This note was uploaded on 04/20/2008 for the course ECON 112 taught by Professor Minkler during the Fall '08 term at UConn.

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Feb 5 - • Income and Substitution Effects • The higher...

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