EconH200L4

EconH200L4 - Supply and Demand A market is a group of...

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Supply and Demand A market is a group of buyers and sellers of a particular good or service. The definition of the good is a matter of judgement: Should different locations entail different goods (and different markets)? What about quality, time, or other characteristics? A perfectly competitive market is one in which (i) the goods offered for sale are identical, and (ii) there are so many buyers and sellers that no one can influence the market price. All buyers and sellers are price takers . Our market experiment comes pretty close. Corrugated cardboard, gasoline, soybeans. This is the model of supply and demand, so perfect competition is important even if few markets exactly match the assumptions.
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Demand for Ice Cream The quantity demanded depends on: Price–the higher the price, the less you buy. Income–for normal goods , the higher your income, the more you buy. For inferior goods , the higher your income, the less you buy. Prices of related goods–frozen yogurt is a substitute for ice cream, so when its price goes up, more ice cream is demanded. Hot fudge is a complement for ice cream, so when its price
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This note was uploaded on 07/17/2008 for the course H 200 taught by Professor Fleisher during the Fall '08 term at Ohio State.

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EconH200L4 - Supply and Demand A market is a group of...

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