Lecture 6 - Announcements HW2 due onight it has 2 graded...

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Announcements HW2 due onight– it has 2 graded parts. The one on Comparative and Absolute Advantage may not be “Grade it Now” so don’t freak out if it doesn’t grade it right away.
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REMINDER: ONLY A CHANGE IN PRICE CAN CAUSE A CHANGE IN SOCIETY’S “ QUANTITY DEMANDED ” OF A CERTAIN GOOD. A change in that society’s DEMAND for a good (a shift of society’s demand curve) can be caused by: 1. A change in consumers’ income or wealth. 2. A change in the price of other available products (substitutes or compliments). 3. A change in consumers’ tastes. 4. A change in consumers’ expectations about things like future income or prices. 5. A change in the number or composition of consumers.
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DEMAND IN PRODUCT/OUTPUT MARKETS shift of a demand curve The change that takes place in a demand curve corresponding to a new relationship between quantity demanded of a good and price of that good. The shift is brought about by a change in the “original conditions” (1-5). movement along a demand curve The change in quantity demanded brought about by a change in price.
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DEMAND IN PRODUCT/OUTPUT MARKETS Shifts versus Movement along a Demand Curve
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Shift of Anna’s Demand Schedule Due to increase in Income SCHEDULE D 0 SCHEDULE D 1 Price (Per Call) Quantity Demanded (Calls Per Month at an Income of $300 Per Month) Quantity Demanded (Calls Per Month at an Income of $600 Per Month) $ 0 30 35 .50 25 33 3.50 7 18 7.00 3 12 10.00 1 7 15.00 0 2 20.00 0 0 5 of 46 DEMAND IN PRODUCT/OUTPUT MARKETS SHIFT OF DEMAND VERSUS MOVEMENT ALONG A DEMAND CURVE Shift of a Demand Curve Following a Rise in Income
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OUTPUT MARKETS: SUPPLY AND THE SUPPLY CURVE
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