Chapter 3 - ECON 004 Principles of Economics Chapter 3...

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1 ECON 004 Principles of Economics Chapter 3 Supply and Demand • Market – A group of buyers and sellers with the potential to trade with each other – Can be defined broadly or narrowly • Macroeconomics • Microeconomics • The economy – A collection of individual markets ECON 004 Principles of Economics Markets • Macroeconomic Markets • Microeconomic Markets ECON 004 Principles of Economics Product and Resource Markets • Product market • Resource market
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2 ECON 004 Principles of Economics Figure 1 The Circular Flow Model Flow of goods and resources •Resource market - •Product Market - Money flows - Firms – - Households – ECON 004 Principles of Economics Competition in Markets • Imperfectly competitive markets • Perfectly competitive markets (or just competitive markets) ECON 004 Principles of Economics Using Supply and Demand • Supply and demand model • Perfect competition • To analyze a market, we need both, Supply and Demand
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3 ECON 004 Principles of Economics Demand – Quantity Demanded • Quantity demanded amount of a good • all buyers in a market would choose to buy •du r ing a period of time • given their constraints ECON 004 Principles of Economics The Law of Demand • When the price of a good rises and everything else remains the same , the quantity of the good demanded will fall Ceteris paribus assumption ECON 004 Principles of Economics The Demand Schedule Demand schedule (definition) – A list showing the quantity of a good that consumers would choose to purchase at different prices, with all other variables held constant.
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This note was uploaded on 10/15/2010 for the course ECONOMICS 2 taught by Professor Cannotremeber during the Winter '09 term at UC Riverside.

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Chapter 3 - ECON 004 Principles of Economics Chapter 3...

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