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Lecture3 - Supply and Demand Ariel Singerman Ariel...

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Supply and Demand Ariel Singerman January 18, 2008 Ariel Singerman () Supply and Demand January 18, 2008 1 / 10
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Introduction to Supply and Demand In this lecture we are going to introduce the basic economic model of supply and demand Definition A market is a group of buyers and sellers with the potential to trade with each other. Note that in economics a market is not a particular place but rather a collection of buyers and sellers Ariel Singerman () Supply and Demand January 18, 2008 2 / 10
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Demand and the law of demand Definition The quantity demanded of a good or service is the number of units that all the buyers in a market would choose to buy, given the constraints that they face. There is a negative relationship between price and quantity demanded. Such a relationship gives rise to the law of demand. The law of demand states that when the price of a good rises and everything else remains the same (ceteris paribus), the quantity of the good demanded will fall.
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