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10Spring.Lecture Notes.Demand

10Spring.Lecture Notes.Demand - Quantity people will buy...

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Managerial Economics Managerial Economics (ECON 5203) Dr. David L. May Oklahoma City University
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Demand Demand Law of Demand Inverse relationship between Price consumers are willing and able to pay and Quantity Demanded at those prices (ceteris paribus) Changes in Quantity Demanded Movement along a demand curve as a result of price changes Changes in Demand Movement of demand function as a result of changes in things that influence demand OTHER THAN PRICE 10/22/10 2 Managerial Economics
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Demand Demand Function
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Unformatted text preview: Quantity people will buy depends on: – Q X = f (P X , P Y , I, E, Pref, Pop) • Substitutes [ δQ /δP > 0 ] = Change in 10/22/10 3 Managerial Economics Demand • Demand – Algebra – Q X = 500 - 2P X + 0.5P Y + 1.5I (Demand Function) – P X = 250 + 0.25P Y + 0.75I – 0.5Q X (Inverse Demand Function) – Consumer Surplus • Benefit buyers receive from paying prices less than they’d be willing to pay • Measured as area below Demand but above Price 10/22/10 4 Managerial Economics...
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10Spring.Lecture Notes.Demand - Quantity people will buy...

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