Chapter 4 - Demand, Supply, and Market Equilibrium Chapter...

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Demand, Supply, and  Market Equilibrium Chapter 4
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Demand, Supply, and Market  Equilibrium Perfectly competitive market  - a  market with so many buyers and  sellers that no single buyer or seller  can affect the market price.
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Types of Markets Product (or output) markets In product (output) markets firms supply  and households demand Input (or factor) markets In input (factor) markets firms demand and  households supply.
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Determinants of Demand Price of the good Income Accumulated wealth Price of other goods Tastes and preferences Expectations for the future 
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The Demand Curve  Quantity demanded  is the amount  (number of units) of a product that a  household would buy in a given time  period if it could buy all it wanted at the  current market price.
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Price and Quantity Demanded:  The Law of Demand     Anna s Demand Schedule for Telephone Calls PRICE  ($ / CALL) QUANTITY DEMANDED (CALLS PER MONTH) 0.00 30 0.50 25 3.50 7 7.00 3 10.00 1 15.00 0
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Law of Demand Law of demand  states that there is a  negative relationship between price of a  good and the quantity demanded, ceteris  paribus. That is, if price increases quantity  demanded goes down and vice versa.
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The Demand Curve The  demand curve   is a graph illustrating  how much of a given  product a household  would be willing to  buy at different  prices.
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Properties of the Demand  Curve Negative Slope An increase in price will decrease quantity  demanded and vice versa Intersects X-axis Where it intersects depends on satiation Intersects Y-axis Income and wealth limitation
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Changes in Quantity Demanded  vs. Changes in Demand 
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This note was uploaded on 10/13/2008 for the course ECON 2006 taught by Professor Rdcothren during the Fall '08 term at Virginia Tech.

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Chapter 4 - Demand, Supply, and Market Equilibrium Chapter...

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