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Chapters+3++9-29-2006+

Chapters+3++9-29-2006+ - Chapter 3 Supply and Demand UCI...

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(9-29-2006) 1 Chapter 3 Supply and Demand UCI Fall 2006 Economics 1 Instructor: Soheila Crane
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(9-29-2006) 2 What is a market? A market exists where an exchange takes place Examples? LEGAL ILEGAL REGULATED What determines the price of a product? Does the price of a product impact its production or consumption? Why do prices and production levels change?
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(9-29-2006) 3 Who are market participants? Individuals/households Businesses Government agencies
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(9-29-2006) 4 What are the goals of consumers to participate in a market? What are the goals of businesses/producers to participate in a market? What are the goals of government agencies? Consumer goals maximize their happiness Producers goals maximize profits Gov’t agencies maximize general welfare Why participate in a market?
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(9-29-2006) 5 Why tradeoffs are necessary? Why can’t all market participants attain everything they desire? Limited resources ---- constraints
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(9-29-2006) 6 Specialization and Exchange We cannot produce everything we consume! Even if we could produce all we consume, it would make more sense (it is more efficient) to specialize and engage in trade
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(9-29-2006) 7 Market Interactions Product markets Factor markets Foreign market participants Foreign market participants
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(9-29-2006) 8
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