Lecture+3+September+9

Lecture+3+September+9 - Today s Agenda The Coordination...

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Unformatted text preview: Today s Agenda The Coordination Problem Demand Supply Equilibrium Price and Quantity TA office hours Ms. Zhang New Jersey Hall 423 Wednesdays, 11:20 a.m. to 12:20 p.m. Ms. Sapra New Jersey Hall 427 Thursdays, 2:40 p.m. to 3:40 p.m. Optional review/problem Q&A sessions begin next week Details to follow Fundamental allocation problems any economic system must solve What goods and services should be produced? How should they be produced? For whom should they be produced? Guns Butter Social institutions for allocation decisions tradition central planning allocation by price in markets A major theme of this course: How a system of markets solves the problems of What How For Whom Coordination problem Why are shortages and surpluses so unusual? Rationing function of the price mechanism Variations in price balance supply and demand Demand Q D = total amount of a commodity all households wish to purchase per period desired purchases--amount buyers are willing (and able) to buy not amount actually purchased quantity per period stocks v. flows Determinants of Demand Population Average income Degree of inequality in income Tastes or preferences Price of the commodity Prices of related goods Substitutes Demand for a good in creases when the price of a substitute increases Examples: tea and coffee Complements Demand for a good de creases when the price of a complement increases Examples: cars and gasoline How prices of related goods prices affect demand Determinants of Demand Population Average income Degree of inequality in income Tastes or preferences Price of the commodity Prices of related goods Determinants of Demand...
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This note was uploaded on 11/10/2011 for the course ECON 220:102 taught by Professor Rubin during the Fall '11 term at Rutgers.

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Lecture+3+September+9 - Today s Agenda The Coordination...

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