ECON 1001_2010_Week 2_lecture_2

ECON 1001_2010_Week 2_lecture_2 - Food for Growth I: Be...

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1 Food for Growth I : Be honest/truthful to yourself, for you speak to yourself under oath- Anonymous
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2 Overview Lecture 2.1: The Demand Model Lecture 2.2: The Supply Model Lecture 2.3: Market Equilibrium Lecture 2.4: Market Intervention Lecture 2: The Demand and Supply Model
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3 Lecture 2.1: Demand Model
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Demand The quantity demanded of a good or service is the amount that consumers plan to buy in a given period at a particular price. If a person “demands” something, they Want it, Can afford it, and Have made a definite plan to buy it.
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5 Price ($) Price ($) Quantity Quantity Demanded Demanded (000) (000) Demand Schedule For Bicycles 280 320 360 400 440 480 520 560 600 36 28 22 18 14 10 6 4 2
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6 Demand Curve 240 320 400 480 560 640 0 10 20 30 40 Quantity Demanded Price P a bQ = -
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7 Change in quantity demanded: Movement along Demand Curve Q P D
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8 Law of Demand Ceteris paribus, the higher the price, the lower Ceteris paribus, the higher the price, the lower the quantity demanded in the market; and the the quantity demanded in the market; and the lower the price the higher the quantity lower the price the higher the quantity demanded in the market. demanded in the market.
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9 Market Demand From Individual to Market Demand Market demand curves are the HORIZONTAL SUMMATION of the individuals’ demand curves.
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Jerry’s Demand for Ice Cream Price Quantity $0.00 12 $0.50 10 $1.00 8 $1.50 6 $2.00 4 $2.50 2 $3.00 0
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Catherine’s Ice Cream Demand Price Quantity 3.00 1.50 6 12 (Inverse) Demand curve P = f(Q) can be written: P = 3 – 0.25Q, Or in terms of Q = f(P): Q = 12 – 4P
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Market Demand Market demand - individual demand curves summed horizontally . It shows how total quantity demanded varies with
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This note was uploaded on 06/10/2011 for the course ECON 1001 taught by Professor - during the Three '07 term at University of Sydney.

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ECON 1001_2010_Week 2_lecture_2 - Food for Growth I: Be...

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