E303lect9F09

E303lect9F09 - Lecture 9 Reading Baye Ch 2 pp 35-45 HW#3...

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Lecture 9 September 11, 2009 Reading Baye, Ch 2. pp. 35-45. HW#3 online, due WEDNESDAYc REVIEW___________________________________________________ I. Introduction B. Components of Effective Decision-Making 5. Marginal Analysis c. Incremental decisions PREVIEW _____________________________________________________ II. Chapter Market Forces: Demand and Supply A. Introduction and Overview. 1. Overview 2. The Structure of the Supply and Demand Model. B. The Demand Side of the Market 1. Motivation: Diminishing marginal utility: 2. Definition of Demand Curve 3. Determinants of Demand. LECTURE________________________________________________________ II. Chapter Market Forces: Demand and Supply A. Introduction and Overview. 1. Overview . The purpose of this chapter. Economics proceeds via models . A model is an abstraction from reality, done for the purpose of explanation, or prediction. It is important to emphasize that these models are necessarily unrealistic. A “model” that captured all the complexity of reality wouldn’t be useful at all. Rather the oversimplification of a model is useful if it serves effectively an explanatory or predictive function. For example, when discussing the time value of money, we constructed a first of the firm = + - = 1 ) 1 ( t t t t i TC TR PDV The purpose of such a model is explanatory. With it, for example, we can see how the different portions of a firm fit together: Marketing is responsible for TR maximization, Production attempts to minimize costs. Finance is concerned with the
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This note was uploaded on 04/12/2010 for the course ECON 303 taught by Professor Shrestha during the Fall '08 term at VCU.

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E303lect9F09 - Lecture 9 Reading Baye Ch 2 pp 35-45 HW#3...

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