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Unformatted text preview: the consumption bundle. 1/16/08-Basic assumptions of the supply and demand model o Competitive market Many buyers Many sellers o Product is homogeneous-Demand side of the market-Objective of the consumers: maximize utility-Consumers buy if marginal utility if it is greater than the price. Buyer value > Price.-Things that can shift demand curve o Preferences o Income o Prices of related goods Substitutes Complements o Number of consumers and their demographics o Expected future prices.-Supply Side o Objective of producers o Maximize profit = Total Revenue- Total Costs-Producers Determinants o Input prices o Technology o Prices of substitution in production o Number of firms in the market o Expected future price-...
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