Class01_14

Class01_14 - 01/14/2008 Class Notes (cover part of Chapter...

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01/14/2008 Class Notes (cover part of Chapter 3 in the textbook) Class Outline Demand Changes in Demand Demand Def. Demand The demand is the maximum quantity a consumer is willing and able to purchase at various prices during some period, other things unchanged . Q: How other things remaining the same, does the quantity demanded of a good change as its price changes? A: The law of demand provides the answer! Law of Demand Other things remaining the same, the higher the price of a good, the smaller is the quantity demanded; and the lower the price of a good, the greater the quantity demanded. Example: Assume the relationship between price (p) and quantity demanded (q d ) of croissants is linear. 1 8 'Demand Function' 2 2 16 'Inverse Demand Function' d d q p p q = - + = - + 1
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Table 1. Demand Schedule for croissants q d p (in $) 8 0 7 2 6 4 5 6 4 8 3 10 2 12 1 14 0 16 Graphically: The demand curve reflects the marginal benefit of a good.
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This note was uploaded on 04/29/2008 for the course ECON 251 taught by Professor Blanchard during the Spring '08 term at Purdue.

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Class01_14 - 01/14/2008 Class Notes (cover part of Chapter...

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