201c3ol - CHAPTER 3 SUPPLY DEMAND-GOALS OF MARKET...

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-GOALS OF MARKET PARTICIPANTS: -Consumers want to maximize their utility (satisfaction) -Businesses want to maximize their profits -Governments want to use scarce resources to maximize the general welfare of society -THE CIRCULAR FLOW (T-11) -Factor market: where factors or production (land, labor, capital, entrepreneurship) are bought and sold -Product market: where finished goods and services (products) are bought and sold -Market transactions involve an exchange of $$$ for goods (product market) or resources (factor market) examples: buy gas/textbooks; labor/job -DEMAND -Demand exists only if you are BOTH willing and able to pay for a good -Demand curve (T-12) -Downward sloping left to right -As price falls, people will buy more of it -Inverse relationship between price and quantity is called the "law of demand" -DETERMINANTS OF DEMAND -Tastes -Income -Other goods -Expectations -Number of buyers -SUBSTITUTE GOODS--when the price of one declines,
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201c3ol - CHAPTER 3 SUPPLY DEMAND-GOALS OF MARKET...

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