PAM_2000_Spring_2009_Lecture_1

PAM_2000_Spring_2009_Lecture_1 - PAM 2000 Lecture 1 Agenda:...

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    PAM 2000 Lecture 1 Agenda: Marginal analysis: non-market examples Demand Curves Demand Shifters Supply Curves Supply Shifters Market Equilibrium
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    Reading for PAM 2000 Perloff, Ch. 1 and 2 M,B,N Ch. 1-20.
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    Demand Curves Let’s look at a specific economic relationship: The Demand Curve Say for cars at a dealership, we observe data: PRICE / # CARS SOLD per week $20,000 5 $16,000 10 $12,000 15 10,000 20
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    Demand Curves (con’t) Graph of data shows a “demand curve” or “demand schedule” for cars at this dealership: Which is the dependent and which is the independent variable? Dependent versus independent variables are traditionally reversed for demand graph!
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    Demand Curves (con’t) Def’n. of the demand curve: A demand curve shows the quantity of a good buyers are willing to buy at various prices, ceteris paribus , such as the income of buyers, price of substitutes, etc. Reflects the “Law of demand”: As the price of any good rises, the quantity purchased of the good falls, ceteris paribus .
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    Demand Curves (con’t) Market Demand Curves are simply all the individual demand curve summed up We are usually interested in market demand curves. But it is still driven by individual choices
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    Demand Shifters Now say income of car buyers
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PAM_2000_Spring_2009_Lecture_1 - PAM 2000 Lecture 1 Agenda:...

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