ECONnotes - 03:54

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03:54 Positive analysis- attempts to explain how an economic system works or to  predict how it will change over time (fact). Normative analysis- focuses on issues of social welfare (what will enhance or  detract from common good) [opinion] Marginal Analysis (refers to the last unit of the good consumed or produced)- If  MB>MC, do it. If MC>MB, don’t.  Expected value of MB= probability x pay out Supply & Demand- (subscript I= endogenous; determined within model, e=  exogenous; given in the model) Demand- D= Qd(Pi) (holding other factors constant) Qd= a – bP (where a= exogenous factors) P= a/b – Q/b (a/b= choke price- price when Q falls to zero) [inverse demand  function in terms of price] Exogenous factors for demand-  Tastes and preferences Income Price and  availability of related goods, Taxes and subsidies Expectations of future prices and 
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This note was uploaded on 03/02/2011 for the course ECON 3010 taught by Professor Reynolds during the Spring '09 term at UVA.

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ECONnotes - 03:54

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