Econ 011207

Econ 011207 - o this might be the cost of producing apples...

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Econ 011207 Lecture 3 Buyer’s Value=BV-P Seller’s Profit=P-SC Market Supply and Demand Competitive Equilibrium Theory o What if every scale of apples takes place at the same price? o Why might this happen? o Everyone wants to maximize profits, nobody wants to pay more than others are paying, nobody wants to sell for less than others the competitive eq. theory predicts o prices o number of sales o who bought and sold o total profits and profits of each type supply and demand curves c.e.t. also known as “supply and demand” theory a demander’s buyer value is the most he will pay for bushel supplier’s seller cost is lowest price at which she will provide a bushel of aples
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Unformatted text preview: o this might be the cost of producing apples o could be the value of keeping apples for oneself-opportunity cost o profits of seller=price-seller cost o profits of buyer=buyer value-price • drawing supply and demand curves [online] o first step-find distribution of buyer values and seller costs o this will be with the experimental data for your section o equilibrium line • prediction and observation o prediction: what predicted o observation: real world o good theory predicts events in the lab and in the real world...
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