Ch. 3 Outline - Chapter 3 Outline Supply, Demand, and the...

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Chapter 3 Outline Supply, Demand, and the Market Process Econ 1B, Spring 2010 A. The price system and circular flow 1. Prices s signals a. To evaluate 1) 2) 3) b. To allocate 1) 2) 2. Circular flow of businesses and households a. Businesses b. Households c. Connected d. Factors of production and payment 1) 2) 3) 4) 3. A caution about demand and supply curves a. Dependent and independent in math b. In economics c. Marginalist revolution http://cepa.newschool.edu/het/essays/margrev/margrev.htm 1) 2) B. Law of Demand 1. Demand is a theory 2. Individual demand 1
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a. Demands differ b. Relative prices Example: Demand curve for travel— weekend trips P ($1000’s) 1.5 1.25 1.0 0.75 0.5 0.25 d 1 banker 0 1 2 3 4 5 Q P ($1000’s) 1.5 1.25 1.0 0.75 0.5 0.25 d 1 college student 0 1 2 3 4 5 Q (trips per year) c. Variables that affect demand 1) 2) 3) 4) 5) 6) 7) 8) 9) d. ceteris paribus 2. Intuitions behind demand a. Substitution 2
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b. Diminishing marginal utility 3. Market demand a. Individual b. Market
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This note was uploaded on 09/08/2010 for the course ECON 1B at San Jose State University .

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Ch. 3 Outline - Chapter 3 Outline Supply, Demand, and the...

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