Chapter 7 - Supply and Demand

Chapter 7 - Supply and Demand - Chapter 7 Supply and Demand...

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Chapter 7 Supply and Demand
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Assumptions A large number of well-informed buyers and sellers, none having market power The time period is short. Firms don’t have time to change the amounts of their capital, and no new firms enter the market.
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Market An arrangement, institution, or a mechanism that brings buyers and sellers of a good or service together.
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Market Demand Function A table, curve, or an equation that shows the quantities of a good that consumers are w illing and able to buy at different prices during a certain period of time.
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Determinants of quantity demanded by a consumer Own Price Consumer’s Income Normal Goods Inferior Goods Cross Prices Substitutes Complements Expected Future Own Price Consumer Tastes Other Start with an individual consumer’s demand for a good.
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0 1 2 3 4 5 6 7 8 0 1 2 3 4 5 6 7 P q d
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7 2 5 P q Q D d P 4 3 4 3 200 300 400 5 4 3 Market Demand Function Assuming 100 Consumers q × 100 = Q
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Own Price Consumer’s Income
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This note was uploaded on 11/08/2010 for the course ECN ECN 001A taught by Professor Scottcarrell during the Spring '10 term at UC Davis.

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Chapter 7 - Supply and Demand - Chapter 7 Supply and Demand...

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