Week%203%20session%202%202009

Week%203%20session%202%202009 - Microeconomics 1 Econ 1101...

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Diane Enahoro Session 2 2009 1 Microeconomics 1 Econ 1101 Session 1 2009 Week 3 - Groups A and B Supply and Demand - An Introduction Reference. Ch 3 Text 1. Markets in Economies 2. Demand and Supply and their Determinants 3. Market Equilibrium 4. Social Welfare and Efficiency
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Diane Enahoro Session 2 2009 2 Core Principles 1. The Efficiency Principle Efficiency is an important goal because when output grows larger everyone can potentially have a larger share. 2. The Equilibrium Principle A market in equilibrium leaves no unexploited opportunities for individuals, but it may leave further gains available through collective action .
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Diane Enahoro Session 2 2009 3 Different types of Economies Planned Unplanned A market is a set of conditions that allows buyers and seller to exchange goods A Perfect Market is an “ideal” market Characteristics 1. Large number of independent small buyers and sellers none of whom can influence Price - “Price takers” 2. Standardised product 3. Perfect information and perfect mobility 4. The price is determined in the market and the price mechanism allocates goods and services
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4 Demand Effective” Demand; - Demand for good x per unit of time. Dx = f (price of X, price of other goods, income of consumers, tastes, number of consumers, expectations about future prices) Dx = f(Px) ceteris paribus The Law of Demand states that more of a good will be demanded as the price falls – ceteris paribus. Income effect
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This note was uploaded on 08/06/2011 for the course FIN 3616 taught by Professor Henry during the Three '11 term at University of New South Wales.

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Week%203%20session%202%202009 - Microeconomics 1 Econ 1101...

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