Lecture 7

Lecture 7 - (Change in Demand) Tutor Pricing Example: Tell...

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January 28, 2009 Three types of markets: Factors of production - inputs in the production process (capital, labor market like careerbuilder.com) Financial products (like stock market) Could be a physical location like a stock exchange Quantity demanded vs. demand: QD is when price changes (specific point) and D is when anything changes but the price (curve or schedule) Law of demand – as price goes up, the QD drops (basically affordability; people only have a finite amount of money) Market demand – several lines put together (sum of all the demand curves) Preferences may change when: People become better informed New goods become available Change in the quantity demanded – change in the quantity of a good that people plan to buy that results from a change in price Change in demand – change in quantity that people plan to buy when any influence other than price of the good changes Movement along the Demand Curve (Change in QD) vs. Shifts of the Curve
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Unformatted text preview: (Change in Demand) Tutor Pricing Example: Tell a Story in Class Experiment about Tutoring: Expectations: Preferences ( can be similar to substitutes): Demand curve would go left if there’s another tutoring service that offers 2 A’s in two classes Income: Demand curve would shift right if income increases (and price of product doesn’t change) Substitutes: If a tutoring service in another class offers a cheaper price, then the demand curve for Econ tutoring will shift left. (People will go with the cheapest) What if you won’t buy the tutoring service regardless of cost? Vertical line (QD determines where it begins) When would there be a horizontal line? No matter how many people want a product, it will always be the same price. Quantity supplied (QS) – amount of a good, service, or resource that people are willing and able to sell during a specified period at a specified price Law of supply • If price rises, QS increases...
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This note was uploaded on 09/29/2009 for the course ECON 101 taught by Professor Balaban during the Spring '07 term at UNC.

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Lecture 7 - (Change in Demand) Tutor Pricing Example: Tell...

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