CH3EX - A market is made up of buyers and sellers. Buyers...

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1 A market is made up of buyers and sellers. Buyers have a demand for a product and sellers offer up a supply of a product. Supply and demand is an economic model . An economic model is a relationship between variables. What is a variable? Economic models are simplified and therefore make assumptions. Why do we use simplified models? The market for apartments We have a small college town. All apartments are identical (two bedroom two bath). There are near apartments and far apartments. The far apartments require you to drive to campus. There is an unlimited supply of far apartments at a know price ($400). We will consider the market for near apartments. We want to determine the price of a near apartment. What are you willing to pay to live close to campus? Price of a near apartment Quantity Demanded $1200 $1000 $800 $700 $600 $500 We can graph this relationship. When you decided how much you were willing to pay to live near campus, what sort of factors influenced your decision? In other words what could change that would cause
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CH3EX - A market is made up of buyers and sellers. Buyers...

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