ecg590i_lecture05

ecg590i_lecture05 - ECG590I Asset Pricing. Lecture 5:...

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ECG590I Asset Pricing. Lecture 5: Supply and Demand 1 5 Supply and Demand A bit of economics will help us understand what is going on in &nancial markets, especially the spot markets. Example: understand the price of electricity, the price of electricity. 5.1 Market fundamentals For a given good, some individuals are demanding it and some are selling it. John Seater, North Carolina State University, Fall 2007
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ECG590I Asset Pricing. Lecture 5: Supply and Demand 2 5.1.1 Demand: Q vs. P & Demand function: Q d ( P ) & The quantity demanded Q of a good is a function of its price P . & Usually, the higher the price, the lower the quantity demanded John Seater, North Carolina State University, Fall 2007
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ECG590I Asset Pricing. Lecture 5: Supply and Demand 3 John Seater, North Carolina State University, Fall 2007
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ECG590I Asset Pricing. Lecture 5: Supply and Demand 4 5.1.2 Supply: Q vs. P & Supply function: Q s ( P ) & The quantity o/ered Q of a good is a function of its price P . & Usually, the higher the price, the higher the quantity demanded John Seater, North Carolina State University, Fall 2007
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ECG590I Asset Pricing. Lecture 5: Supply and Demand 5 John Seater, North Carolina State University, Fall 2007
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ECG590I Asset Pricing. Lecture 5: Supply and Demand 6 5.2 Function of several variables 5.2.1 Demand & The quantity demanded may depend on variables (denoted by X ) other than the price. & Q d ( P;X ) & Example: my demand for electricity ( Q ) is a function of my income ( X ). For a given price, the higher my income, the higher my demand for elec- tricity. John Seater, North Carolina State University, Fall 2007
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ECG590I Asset Pricing. Lecture 5: Supply and Demand 7 John Seater, North Carolina State University, Fall 2007
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ECG590I Asset Pricing. Lecture 5: Supply and Demand
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ecg590i_lecture05 - ECG590I Asset Pricing. Lecture 5:...

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