Handout2-DemandandSupplyModel

Handout2-DemandandSupplyModel - Supply and Demand Model...

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Supply and Demand Model Defined – a model of market behavior Market – a collection of buyers and sellers of a product or service Geographic boundary Product or service boundary Who determines the price at which a product or service is bought and sold? Few sellers and many buyers – primarily the sellers Many sellers and few buyers – primarily the buyers Few sellers and few buyers – primarily a negotiated price Many sellers and many buyers – primarily the market
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Clas sifying or categorizing factors that influence demand for a product or service (in an equation format) Q D = f {P, P S , P C , A, Y, D, X, M, E} Q D = quantity demand of a product or service (in units) f = “is a function of”, a math concept P = price of a product or service P S = price of a relevant substitute good or service P C = price of a relevant complementary good or service A = advertising or marketing Y = income D = demographic factors X = various qualitative factors M = various macroeconomic factors E = expectations, primarily expected price and income in the future
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Handout2-DemandandSupplyModel - Supply and Demand Model...

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