2 - -demand function:-formally, mathematically, relates...

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-Quantity demanded…is the amount of a good or service that consumers WANT to buy at a given price, holding constant other factors that affect demand -what determines demand: -price of the good/service -tastes/preferences -prices of complements and substitutes -income, information (e.g. health impacts) -demand curve: -shows quantity demanded at each price, holding constant all other factors that affect purchases -law of demand-demand curve slopes down-higher price implies fewer demanded -movement along the demand curve: due solely to change in the price of the good; all else remained the same -shift of the demand curve: due to any factor other than price of the good -homer raises price for elephant rides: movement along demand curve -demand for pets after introduction of The Pill: shift of the demand curve
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Unformatted text preview: -demand function:-formally, mathematically, relates quantity demanded to price and other variables-generically: Qd = (price of good, income, price of substitutes, price of complements)-inverse demand curve- expresses price as a function of quantity-Quantity suppliedis the amount of a good or service that suppliers WANT to sell at a given price, holding constant other factors that affect supply-what determines supply:-price of the good/service-costs of prduction-government regulations-supply curve-shows quantity supplied at each price, holding constant other factors that affect production-there is no law of supply-can slope up, down, be vertical, or horizontal-depends on how costs vary w quantity supplied...
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