January 23 notes

January 23 notes - January 23, 2006 Chapter 3 Notes...

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January 23, 2006 Chapter 3 Notes Equilibrium price coincides with equilibrium quantity = market equilibrium. Quantity Demanded : the quantity of a good or service that a consumer is willing to purchase at a given price. Demand Schedule : a table showing the relationship between the price of a product and the quantity of the product demanded. Demand Curve : a curve that shows the relationship between the price of a product and the quantity of the product demanded. As the price falls, the quantity demanded increases. Market Demand : the demand for a product by all the consumers in a given geographical area. Add all the quantities demanded together to get market demand. The Law of Demand : holding everything else constant (ceteris paribus), when the price of a product falls, the quantity demanded of the product will increase, and vice versa. What explains the Law of Demand? Substitution Effect : the change in the quantity demanded from a price change making the good more or less expensive relative to other goods that are substitutes. Income Effect
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January 23 notes - January 23, 2006 Chapter 3 Notes...

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