Chapter 3_Micro_S09

Chapter 3_Micro_S09 - Chapter Demand, Supply, and Market...

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3 Chapter Demand, Supply, and Market Equilibrium
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2 Chapter 3 Supply and Demand INPUT MARKETS AND OUTPUT MARKETS: THE CIRCULAR FLOW FIGURE 3.1 The Circular Flow of Economic Activity
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3 Chapter 3 Supply and Demand INPUT MARKETS AND OUTPUT MARKETS: THE CIRCULAR FLOW factors of production The inputs into the production process. Land, labor, and capital are the three key factors of production. input or factor markets The markets in which the resources used to produce products are exchanged.
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4 Chapter 3 Supply and Demand INPUT MARKETS AND OUTPUT MARKETS: THE CIRCULAR FLOW labor market The input/factor market in which households supply work for wages to firms that demand labor. (Chapter 10) land market The input/factor market in which households supply land or other real property in exchange for rent. (Chapter 10) capital market The input/factor market in which households supply their savings, for interest or for claims to future profits, to firms that demand funds to buy capital goods. (Chapter 11)
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5 Chapter 3 Supply and Demand INPUT MARKETS AND OUTPUT MARKETS: THE CIRCULAR FLOW product or output markets The markets in which goods and services are exchanged. In this chapter we focus on demand and supply in output markets
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6 Chapter 3 Supply and Demand Overview: Demand and Supply in Output Markets Demand Determinants of Demand Quantity Demanded vs. Demand Law of Demand Movement along the demand versus shift in demand Market Demand Supply Determinants of Supply Quantity Supplied vs. Supply Law of Supply Movement along the supply curve versus shift in supply Market Supply Equilibrium Shortage/Excess Demand Surplus/Excess Supply
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7 Chapter 3 Supply and Demand DEMAND IN PRODUCT/OUTPUT MARKETS Determinants of the amount of Gino’s pizza demanded by an individual?
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8 Chapter 3 Supply and Demand DEMAND IN PRODUCT/OUTPUT MARKETS Determinants of Demand The price of the product in question The income and wealth available to the household The prices of other relevant products available to the household The household’s tastes and preferences The household’s expectations about future income, wealth, and prices
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9 Chapter 3 Supply and Demand DEMAND IN PRODUCT/OUTPUT MARKETS quantity demanded The amount (number of units) of a product that a household would buy in a given period at a given price .
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10 Chapter 3 Supply and Demand Demand demand schedule : A table showing how much of a given product a household would be willing to buy at different prices . demand curve A graph illustrating how much of a given product a household would be willing to buy at different prices . Along the demand curve/schedule, all other relevant variables are held constant. Only price and quantity demanded can change.
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11 Chapter 3 Supply and Demand DEMAND IN PRODUCT/OUTPUT MARKETS PRICE AND QUANTITY DEMANDED: THE LAW OF DEMAND demand schedule A table showing how much of a given product a household would be willing to buy at different prices.
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This note was uploaded on 07/22/2009 for the course ECON 203 taught by Professor Nelson during the Fall '08 term at Texas A&M.

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Chapter 3_Micro_S09 - Chapter Demand, Supply, and Market...

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