EC101sOutlines05Supply&Demand

EC101sOutlines05Supply&Demand - EC101 BB & EE / Manove...

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EC101 BB & EE / Manove Lecture 5: Supply & Demand Specialization p 1 EC101 BB & EE / Manove Supply and Demand We’ve discussed voluntary exchange in the free- market model. We’ve discussed when people would want to exchange goods (or sell and buy),… but we haven’t analyzed how much or how many the would want to sell or buy. Now we examine supply & demand , which helps explain how people decide wha and how much explain how people decide what and to buy and sell Supply & Demand p 2 and enables us to predict what the price will be.
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EC101 BB & EE / Manove Milk Production in the US In 2009, US wholesale farm price of milk averaged roughly 20 cents/quart ,… and total milk production was and total milk production was about 95 billion quarts (liters). Supply & Demand p 3 EC101 BB & EE / Manove How can economists predict prices and quantities bought and sold? Suppose there are, say, a hundred people Suppose there are, say, a hundred people who want to buy milk,… and a hundred people who want to sell milk and a hundred people who want to sell milk. And suppose they are going into a large room to bargain over prices and quantities to be bought and sold. Supply & Demand>Milk p 4
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EC101 BB & EE / Manove Predicting prices 2 You, the economist, want to predict prices and quantities traded. You have an opportunity to interview each You have an opportunity to interview each buyer and each seller, one at a time.
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This note was uploaded on 12/11/2010 for the course ECON 101 taught by Professor Idson during the Fall '08 term at BU.

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EC101sOutlines05Supply&Demand - EC101 BB & EE / Manove...

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