1-19-09 - a. Inferior goods b. Normal goods 6. Future...

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Microeconomics – Class Notes – 1/19/09 When taking partial derivatives, if you take the partial derivative (of a specific, single variable), you simply treat all other variables as though they are constants. o So in an equation for utility: U = 2x^2 + 3y^2 If you take the derivative with respect to y, the derivative is: 9y^2 (LAW OF DEMAND ) – As price increases, the quantity demanded decreases. As the price decreases, the quantity demanded increases.
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ANOTHER EXAMPLE OF THE Law of Demand: What is Q if P = 30? Q = 80 – 2*(30) = 20 SHIFTS IN DEMAND: 1. Prices of complement goods and substitute goods 2. New Products 3. Government Regulations 4. Tastes and preferences for different goods
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SHIFTS IN DEMAND (CONTINUED) 5. Income (wealth)
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Unformatted text preview: a. Inferior goods b. Normal goods 6. Future expectations (of price) 7. Population MULTIPLE (Two) DEMAND CURVES (represented by the following equations): Q = Cigarettes (demand 1) Q(students) = 20 – P (demand 2) Q(faculty) = 50 - 5P Q(total) = (Qs + Qf) = (20 – P) +(50 – 5P) = (70 – 6P) Anything above the price of 20, students do not demand any quantity. Anything above the price of 10, faculty do not demand any quantity Q(total) [aggregate demand curve] = 0 if P > 20 20 – P if 20 > P > 10 70 – 6P if P < 10 NO STRICT EQUIVALENT LAW OF SUPPLY HOMEWORK: Appropriate problems to do from the study guide for Chapter 2: (1-5, 29, 30, 31, 37) • These are due in class on Wednesday...
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This note was uploaded on 06/03/2009 for the course ECON 200 taught by Professor Nonnenmacher during the Spring '09 term at Allegheny.

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1-19-09 - a. Inferior goods b. Normal goods 6. Future...

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